Credit Professionals are always looking for mechanisms which they can pre-qualify applications. These processes take time and resources in order to get a clear picture on a client. These mechanisms provide a figure (or score) that lenders use to assess the likelihood that a customer will fulfill their financial obligations. Equifax is considered one of the largest resources for brokers & lenders when it comes to qualifying their clients.

Until recently, Equifax’s standard measurement was the Beacon 4.0. However, since there is no standard score in the industry, Equifax continues to innovate and created new measurement mechanisms. Their ongoing goal is to provide a more reliable picture of potential clients.

Last year, Equifax rolled out Beacon 9.0, which offered many improvements over Beacon 4.0. In addition, Equifax also introduced new measurement tools that provide new detailed snapshots of other aspects of your client’s financial situation.

BEACON 9.0.

First, let’s go into detail on Beacon 9.0. Previously, with Beacon 4.0., the score would do an accurate job of predicting the likelihood of a serious delinquency (90 days or worse) within 24 months.

Beacon 9.0. Predicts the likelihood of serious delinquency with enhanced datasets. The model has improved predictive power, which evaluates lines of credit separately from other revolving credit instruments. This takes into account their differences in usage by consumers. The Beacon 9.0. Score does a better job of reflecting current market trends, offering an enhanced evaluation of new-to-credit populations (a significant demographic in Canada.) Unlike 4.0., Beacon 9.0. includes data from Mortgage and Telco performances and provides scores on more files since more data-sets are included. Lastly, Beacon 9.0. includes reason codes to support expanding lines of credit, offers additional insights on trade lines, and model enhancement of trade level evaluation. All these predictive tools allow for less severe delinquency rating of consumers who ‘go bad’ on isolated accounts!

EQUIBUNDLE

In addition to a Beacon 9.0. Score, Equifax introduced other new scores last year, that are currently gaining traction within the industry. Some of these measurements are used to answer very specific and targeted concerns about potential consumers. These scores include but are not limited to:

  • ERS 2.0: A delinquency score that predicts the likelihood of a serious delinquency (90 days past due or worse) within 12 months. Developed using data from 2010-2011
  • CRP 3.0B: A delinquency score that predicts the likelihood of a serious delinquency (90 days due or worse) within 24 months, Developed using data from 2001-2004.
  • BNI 2.0: A Bankruptcy score that predicts the likelihood of a consumer filing for bankruptcy within 24 months.

IDENTITY MANAGEMENT & FRAUD PREVENTION

Equifax has new procedures in place to verify and protect identities.

Equifax now provides lenders with a more detailed picture on consumers than ever before. However, each lender has their own unique adjudication strategies. Credit score can be one factor in assessing an individual’s credit worthiness. There are other factors lenders take into account, as well as other processes that they go through to verify the client.

Equifax has recently rolled out various new security measures to verify identity, accuracy of information and protect against fraud practices. Lenders often rely on the information presented to them by a broker. However, now Equifax has new mechanisms to verify and validate the information while performing due diligence.

  • eID – Is a new tool that Equifax uses to help confirm the presented identity exists and that the individual claiming it, in fact owns it.
  • AML Assist – is a program dedicated to combating money laundering. It helps Equifax and Lenders comply with FINTRAC Guidelines for client identification.
  • Citadel – A consortium against fraudulent applications as well as a fraud database. The information provided from Citadel, as well as a third-party creates a fraud score. The fraud score is then used to identify and prioritize fraudulent applications.
  • Deceased Alerts – Identify fraud risk at on-boarding by checking for a deceased identity flag.

UPCOMING ADDITIONS TO EQUIFAX

Equifax has taken further steps in the United States to popularize their new programs and services. If these programs are successful in the US, they will eventually be made available in Canada. Here are some of the features that Canadian consumers and financial institutions should be looking forward to:

  • Non F2F Verification – This will allow clients to prove and verify their identity completely on line.
  • Seamless AML, Income ++, Etc. – An effort to make AML & Income verification more transparent to both lenders & insurers. Equifax is looking to link financial instituions & employers with Equifax’s database. This would have both AML and Income Verification and would also save countless HR hours within finance institutions.
  • Trended Data – Unique data allows Equifax the ability to see consumer scores over longer period of time 1-24 months.
  • Machine Learning and Deep Neural Networks – A patented process that will decipher the mechanisms behind consumer decision making.
  • Mortgage Score – Score based on mortgage-specific and relevant information. More detailed than a typical beacon score when evaluating data pertaining to mortgage lending.

We hope that this helps clarify some of the changes happening at Equifax. If you have any questions about Equifax, Beacon Scores, or how any of this information affects you, contact RECI and we will be happy discuss it!