consumer trends

Access to Credit Could Expand to 1.5 Million U.S. Consumers Annually

A new way to view consumer credit

ATLANTA, January 23,  2017 /PRNewswire/ — An Equifax December 2016 Consumer Credit Impact analysis found that on an annual basis the addition of trended credit data could result in:

  • 4% or 267,000 more mortgages or improved loan terms for consumers who may have previously been ineligible
  • 11% or 1.1 million more auto loans and/or improved interest rates and terms
  • 4.1% or 65,000 more home equity lines of credit (HELOC) issued to consumers who may have previously been ineligible

Equifax Inc. (NYSE:EFX), a global information solutions provider, today announced that its December 2016 Consumer Credit Impact analysis found that trended credit data used alongside a consumer’s traditional credit report could improve access to credit and/or loan terms for up to 1.5 million consumers on an annual basis.

Trended credit data provides up to 24 months of a borrower’s payment patterns, and offers a historical perspective of specific payment behavior – including scheduled payments, actual payments and past balances. This expanded, two-year, granular view of the consumer gives the lender the opportunity to extract meaningful insights to help predict future behavior around credit.

Trended credit data was first introduced into the marketplace in September of 2016 as part of the mortgage underwriting process in partnership with Fannie Mae. Prior to its introduction, when assessing a potential homeowner’s credit report, mortgage lenders historically had access to an individual’s total outstanding balance of credit, utilization and overall credit availability as part of a consumer’s traditional credit report. The report did not offer details on whether payments serviced all or part of an individual’s debt or if patterns existed in the consumer’s balance utilization.

As an example, one consumer might pay off their balance monthly or pay more than the minimum amount due. While another consumer might make only the minimum payment due almost every month, yet still on time. Assuming both their credit histories and loan characteristics are otherwise about the same, including the fact that they both pay on time, the consumer that pays off their balance monthly or pays more than the minimum amount due would typically be considered a lower credit risk based on their trended data attributes.

Support of a healthy loan marketplace

The Equifax December 2016 Consumer Credit Impact analysis found that on a yearly basis the addition of the new Trended credit data could mean an approximate increase of 4% or 267,000 more mortgages being issued to consumers who may have been previously ineligible. For HELOCs, approximately 65,000 more accounts or a 4.1% more lines of credit could be issued to consumers. Auto loans are expected to see the most significant impact with an anticipated 1.1 million more auto loans either being issued or receiving more favorable terms.

Giving weight to how borrowers pay off credit debt puts more power in their hands to manage their credit evaluation.

“Giving weight to how borrowers pay off credit debt puts more power in their hands to manage their credit evaluation.” said Peter Maynard, senior vice president Global Analytics at Equifax. “New ways of assessing consumer credit behavior through unique insights is something we are continuing to develop at Equifax, and opportunities to expand credit to consumers and mitigate for risk for lenders make these types of approaches solid ones for the entire marketplace.”

Equifax expects an increasing reliance on credit data insights like trended credit data particularly as some industries, like the auto sector, settle into what some analysts view as more of a post-recession norm. For these lenders, it will be vital to leverage as many insights around consumer debt behavior as possible to more confidently assess risk in support of a healthy loan marketplace.

Over the last 10 years, Equifax has focused on utilizing the data it has on hand to support the sustainability of the financial marketplace, as well as the needs of creditworthy consumers. Consumer credit data is the most accurate way to assess a consumer’s financial health and a useful tool in assessing current economic performance. Equifax is working to revolutionize consumer credit information to enhance its offerings in support of consumers and economies around the world.




About Equifax
Equifax powers the financial future of individuals and organizations around the world. Using the combined strength of unique trusted data, technology and innovative analytics, Equifax has grown from a consumer credit company into a leading provider of insights and knowledge that helps its customers make informed decisions. The company organizes, assimilates and analyzes data on more than 820 million consumers and more than 91 million businesses worldwide, and its databases include employee data contributed from more than 6,600 employers.
Headquartered in Atlanta, Ga., Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor’s (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 9,400 employees worldwide.
Some noteworthy achievements for the company include: Ranked 13 on the American Banker FinTech Forward list (2015); named a Top Technology Provider on the FinTech 100 list (2004-2015); named an InformationWeek Elite 100 Winner (2014-2015); named a Top Workplace by Atlanta Journal Constitution (2013-2015); named one of Fortune’s World’s Most Admired Companies (2011-2015); named one of Forbes’ World’s 100 Most Innovative Companies (2015). For more information, visit here.