This one is a big one, folks. As you might know, since September 14, 2020, Equifax changed the rules for the mortgage industry. That’s why, in the 4th episode of #AskAPrivateLender Podcast, we sat down with Roger Mitchell, the Head of Financial Institutions Strategy and Innovation at Equifax Canada, to get the answers to all the how’s, why’s, and what-if’s that you might have.
Roger shared some great insights with us about why Equifax is doing what they do, and where this is all going. Whether you’re a lender or a broker, this episode is important to listen to.
And if you find this episode useful, please share it with your friendly brokers and lenders as well!
Listen, watch, or read the interview below. And stay tuned for more episodes coming up!
Lawrence: Today we have an interesting guest because typically we focus on private lenders, and we felt like it would be a great idea to bring Roger Mitchell in. He’s the Head of Financial Institutions Strategy and Innovation over at Equifax Canada.
Why we felt it was important is because there’s a lot of new rule changes coming into effect that are going to greatly affect private lenders, brokers, and the way you’re going to proceed to do business in the forthcoming future. Roger, thank you for stopping by and joining us today. We’re really excited to have you.
Before we dive into all the new rules and go through all those changes, why don’t you tell everyone a little bit about yourself? I gave out the job title. What does that mean, for starters? What are you in charge of? What do you do? Let’s go from there.
Roger: Thanks. Before I begin, I would like to thank Mortgage Automator. You guys have been fantastic, so thanks for having me. As for my role at Equifax, I’m responsible for our vertical markets. Essentially vertical markets mean industries that we service. Obviously Equifax services multiple industries, such as government, auto, mortgage, credit cards, insurance. I’ve probably forgotten a couple, but I head up that group.
What we’re responsible for is deeply understanding the various verticals or industries that we service. We work very closely with the industry to come up with new and innovative ways to service the market. That’s my role at Equifax. Just to give you a little bit of background, I’ve been at Equifax for just about eight and a half years. I’ve had a variety of different roles.
I started out as a consultant working with subprime and non-prime lenders in Canada. Really helping them launch various businesses at that time, and I slowly progressed as I grew at Equifax.
Lawrence: Eight and a half years at Equifax, but I know that you worked at banks previously. How did that transition happen from you working at a bank to your getting to Equifax? And was it something that you always wanted to do? Was it something you fell into?
Roger: That’s a good question. To be honest, I had worked with Equifax while at a bank, but I had never considered working for a credit bureau while at a bank or any of the other companies I’ve worked for. So how did I get here? If I could take a step back…
I was in school for quite a bit. Did an undergraduate and Master’s degree at the University of Waterloo. After I graduated, I looked for a job. I moved to Toronto and ended up working at an advertising agency called Wonderment. Just where that happened to be located was right across the street from BMO. From when I started at Wonderment, I always wanted to work at a bank, basically. I had a couple of jobs in between my initial job and when I ended up working for BMO, but when I ended up at BMO, I had various positions primarily in data and analytics. Really understanding customer behavior, understanding different products.
I worked in cards, personal lines of credit, auto, as well as mortgage. Really understanding from a bank’s perspective, how customers use certain products. I actually moved onto RBC, and then I was recruited over to Equifax. When I joined Equifax, it wasn’t something that I was necessarily planning on. It just kind of happened.
Lawrence: Is there anything, and this is kind of a weird question to ask, but everyone knows what a credit bureau is. You learn growing up to keep your credit bureau clean because you’re going to want to borrow money later, and if you don’t have a good score or you’re over-utilized, and maybe can’t get those loans. Is there anything unique that maybe you learned being on the other side that the general public doesn’t understand?
One of the things that I’ve noticed. You have a phone bill. It’s maybe $30 a month, $50, $100 a month, it doesn’t sound like a big thing in the grand scheme of things, but if you don’t pay this one little phone bill, it could really affect getting a mortgage, getting a car loan, getting whatever it might be.
Joseph: Now my understanding is the phone companies actually report on a monthly basis your phone bill, whereas before they’d only put it in collections, and it would only affect your score that way. Whereas now I believe, Roger, correct me if I’m wrong, they are reporting every month to say that you’re paying your bills.
Roger: Yeah, you’re absolutely right. I think, with that being said, the answer to the question is just having accountability and responsibility. Even the little things matter, right? Just being on this side of the fence here is obviously some of the things that you wouldn’t normally think would have an effect on someone’s ability to get credit or a loan ultimately will affect those things. Perhaps really pervasive, specifically in the mortgage industry, because I get this question all the time, it’s in and around inquiries. I get this question all of the time when we were having conferences and shows.
How much does an inquiry impact a credit score? The answer to the question is that all credit scores have deduping logic. So even if I am shopping for a mortgage, and typically when a consumer shops for a mortgage, any bureau considers it a shopping trade, which basically means that we know that Roger is going to go out to several different lenders to get a mortgage. Every score dedupes that. I think to the average person out there, they may think that I’ve got all these inquiries, but actually what happens is that yes, there are multiple inquiries, but they’re deduped when considering a credit score.
And in most cases, from a credit scoring perspective, because that’s considered one credit-seeking event, most credit scores won’t include that inquiry for a specific period of time. If you’re doing it today, it won’t be calculated in your score for 30 days. It will give the consumer the benefit of shopping without harming their credit today.
Joseph: When it comes to something like that, if I go to Rogers, and I go to Tellus, and to Bell to apply for a phone, and they’re all going to pull, is that going to be three separate credit pulls? Even if it’s all in that same period of time, or would you say that you guys only treat it like one hit?
Roger: We consider shopping trades to be auto and mortgage. If you have multiple scenarios where you have multiple lenders, we would treat that as one single credit-seeking event. In the example you gave, we would treat it as three separate inquiries.
Lawrence: Interesting. Even if for example, let’s bring up mortgages, let’s say you go to one brokerage house, then another brokerage house, and a third one and again, three different mortgage brokers pull your credit within literally 72 hours, does that literally count as three separate pulls again?
Lawrence: It does not? It will be treated as one, excellent.
Roger: Absolutely. Basically what we’ve done is we’ve aggregated all the mortgage specific information under what we call an industry code. Given that we’ve done that, that’s treated as one single credit-seeking event for a specific period of time.
Joseph: I think that’s a really important point that you’re making because a lot of people have a misunderstanding if someone’s already pulled my credit yesterday, I don’t want you pulling it again so it’s going to hit my score again. I think that’s really important to let people understand whether you’re a consumer or whether you’re a broker or a lender listening. If a broker has pulled someone’s report, and you’re the lender, and you want to do your own inquiry just to make sure, it will not affect the borrower’s score. That’s interesting. Please keep that in mind…
Lawrence: Interesting. I was looking for a mortgage like a month ago. I had two people and I was like, “Can you not pull it again because I don’t want it to hit my score…” You heard it here. That doesn’t affect it anyway.
Let’s talk about all the new changes coming to Equifax, the new rules. I think it’s important especially for lenders listening to the podcast, what can you tell them about what’s going on? What should they know? Obviously they’ve got to get credentialed. Maybe we’ll touch on that a little bit, as well. Let’s talk about those changes.
Roger: What lenders should know is that this is not something that just happened overnight. This is something that we’ve been working on with the industry for probably more than just 12 months.
Essentially, as you know, we’re committed to ensuring that the right level of transparency is provided to the consumer, as well as that the appropriate data security in the ecosystem exists. The changes that we’re bringing to the market on September 14th will address these two things.
As of September 14th, only credentialed members of Equifax will be entitled to receive Equifax information. What we’re also saying is that to ensure the right level of data security, our information can only flow through credentialed platforms, which have been vetted by Equifax. In the current state, what typically happens is that a broker will share a deal with multiple lenders, but on the consumer file, there’s nothing that says to a consumer that lender A and B saw my credit file.
What would be happening afterward is that we’re going to be working with all of the different connectors, as we call it, to ensure that the consumer inquiry is posted to the consumer credit file.
Lawrence: That makes perfect sense. A borrower or whoever’s credit score or bureau that is, they have a right to see who’s looked at their personal information. This is a way to make sure that anyone who gets to put their eyes on that confidential information, there’s going to be a tracking and a report of that so that that individual knows who accessed it.
Joseph: I think it’s just a level of accountability from all parties to be transparent to the consumer as to what’s going on with their financial information. For the longest period of time, people’s information was being spread out throughout the internet via email, via other unsecured connections, and that data could go anywhere, and the wrong people could have access to it, and then potentially abuse that information to do bad with it or harm to that consumer.
I do see and appreciate where you guys are coming from by making these changes. And you’ve been there for eight and a half years, what have been the changes that you’ve seen since you started to today? Because this is a pretty big change.
Roger: I think that the changes that I’ve seen in the eight years is really kind of what’s happened in the market. I think that this change and the scrutiny that’s being placed in this ecosystem is really due to the fact that we’re seeing an increase in data breaches.
We’re also seeing consumers want a level of transparency, so there has to be what we call the requisite permissible purpose. If you did view a consumer credit file, did you have the consent? Did you have the right authorization to view that credit file? I think that those are the things that certainly have evolved, in terms of scrutiny, and more reasons why this is going into place on September 14th.
Lawrence: Anytime there is a new rule that gets put into effect, there’s a progression of people understanding the rule, and then actually following the proper process. I’m sure there are going to be people who maybe didn’t hear about the new rule, they get a credit bureau, they send it off to someone else. They’re breaking the rules, unknowingly, right? For any new rule, it takes a period of time for people to get caught up to speed and understand what’s going on.
What can you say about number one, if people do receive a credit bureau, and they do send it off, and they don’t know they’re not supposed to do that, are there any repercussions that can come from that? How will Equifax know what’s going on? Or they won’t, and it’s more of an honor type system? I know you guys are doing a great job of trying to get out there and educate people.
Roger: The good news is that we’ve reached most of the broker community. In fact, the last numbers I saw suggested that we’re very close to signing up most, if not all brokers that do business with Equifax. Where there is an opportunity, to your point, is, I believe, in the private lending space, from a lender perspective. Traditionally, they may not have had a relationship with Equifax, which is why we’re very happy to partner with Mortgage Automator. What we’ve been doing is we’ve been out there and spreading the message. Doing as many of these podcasts, webinars, different session calls, etc, to educate the market.
What we are relying on is the fact that we have contracts with brokers, as well as lenders, but also we’re hoping that the connectors that we work with will help us amplify the message so that their customer base knows us well.
I think that there’s going to be a certain number of folks that, unfortunately, still won’t follow the rules, won’t be aware, and it’s very hard to guarantee that everyone is going to follow.
We’re doing it for very structured reasons—consumer consent and transparency, as well as data security and protection. I think it makes sense, and we’re asking people to do the right thing.
Lawrence: If you’re a broker or a lender, there is no reason not to follow the rules…
Joseph: There’s no reason from a funding perspective. Okay, funding deals through the system may cost a little bit of money, but it’s easier to access the data, and you know that everything is secure. From the broker’s perspective, nothing changes. It just makes everybody’s jobs easier to go through these systems, and it ensures that confidential information is staying confidential. If you think about yourself, and you think about your own credit bureau, you don’t want your information floating around, right?
You should follow the rules because you should treat everyone else the way you want to be treated, and the way you want the information to be treated. Stay above board, follow the rules. It’s not a significant change, right? Your process is just becoming easier this way.
And I will say that a lot of the Automator clients, who have applied to get credentialed, have been credentialed quite quickly because Equifax has made a huge effort to make sure that the lenders are going to be above board for that date. Kudos to you guys for being on top of that, and pushing things. Essentially just getting things done, and getting these guys all through so they can continue business as usual.
Lawrence: We want to let lenders and brokers know if they don’t follow the rules, and they hypothetically do get caught, whether it’s via random audits or whatever, what are the repercussions of not following the rules that are set to start September 14th?
Roger: It’s very simple. The repercussions are your credentials will be revoked. You will not be an Equifax member. You will not participate in this ecosystem using our information. I’m sure that there are other legal and security parameters that we can lean on, but as far as just operating on a day to day basis, we will revoke someone’s membership.
Joseph: And that’s huge.
Lawrence: I think when it comes to Equifax, in the private mortgage space, people only use Equifax. Any other company that does credit bureaus, not interested in seeing them. Equifax is the premier company to deal with credit. You definitely don’t want to lose those credentials.
Joseph: It’s the only company that Mortgage Automator deals with, so if you lose your credentials, even being an Automator client or a potential Automator client, it will be extremely difficult for you to continue conducting business.
Lawrence: Roger, for the lenders who are listening right now, who have not been credentialed yet, they haven’t reached out to you. Who should they get in touch with? How should they get in touch with you to get those credentials?
Roger: Most private lenders won’t have an existing relationship with Equifax so we’re asking those lenders to reach out to the following email address: na.accounts.services(at)equifax.com. Once you reach out, you’ll get a digital link with all of the different relevant forms, which you’ll need to sign, and one of those forms will be a CASP document, where you’ll need to identify the third-party that you’re using or the connector.
In most cases, it will be Filogix, but I know that Mortgage Automator is also working to get a direct connection. In that particular instance, the lender would write down ‘Mortgage Automator’ and send that back to Equifax.
Lawrence: And for brokers who are also lenders, who are already credentialed on the broker side of things, do they have to do anything to be credentialed as a lender as well?
Roger: Yes, they do. The process is much, much more lighter. They still need to identify who the third-party connector is. They will receive a member number, which Equifax will share with the connector, but the onboarding process is much simpler because they have an existing relationship with Equifax.
Joseph: So even if you’re connected to Filogix via a third-party software like Mortgage Automator, if you are not credentialed with Equifax, you will only be receiving the application and not the bureau that normally comes with it?
Roger: That’s correct.
Lawrence: I’m assuming that these connectors, whether it’s Filogix or Lendesk, who we’re also connected with, they will not attach, they will not provide that. That’s an arrangement or understanding that you’ve already made with these connectors.
Roger: The industry changes we’re making are specific to the entire industry. It’s the exact same thing.
Lawrence: Why are credit bureaus so complicated to look at and read for the average person? When I look at a credit bureau there is a lot of stuff that I don’t know why it’s there. Typically I’m looking for accounts. Are things bouncing or are they not making their payments? Or how far are they behind?
Number one, is there a place on the Equifax website to go where it actually describes what is on a credit bureau or is there some sort of a resource that explains it? And number two, why is it complicated?
Roger: Good question. There certainly is a resource tool that I could provide to you. We actually have a microsite which basically has an explainer, in terms of how to read the bureau. You may be aware that Equifax made some recent changes and enhancements to the existing broker credit report on May 4th. We have heard some of the feedback that you’re sharing right now, in terms of it being difficult to read.
We are working with various constituents in the ecosystem to understand what it is that brokers, as well as lenders, want to see in a report. We’ve actually just gone through those particular discussions, but I do want to say, the last thing that we want to do is just implement a change on May 4th and then do another change right away. We want to make sure that we understand what the new kind of suggested bureau is going to look like, which we’ve just concluded. We haven’t officially decided when the new report will come in. We’re still working on that.
As far as why it looks like that way, to be perfectly honest, we’ve tried our best to provide new and enhanced or value-added services into this channel, which would essentially drive efficiency, as well as give brokers what they need to close more deals. We realized as we have gone through that it’s harder to read. And it’s primarily due to our current technology stack, however, we are going through a business transformation where we’re going to be able to do things in a much more consumer, as well as customer-friendly way.
The average broker or lender is going to see a much different Equifax when we do launch this transformation that we’re going through, and it’s part of the reason why we haven’t really landed on a date when this new bureau is going to come out, but we expect this to come out Q2 next year, high level. It could change, but again, we don’t want to make a lot of changes, knowing that we just introduced a new credit report.
Lawrence: And I’m sure over the years there have been updates to credit bureaus. Is there something that’s in the pipeline that you guys are working towards, in terms of different sources of data that are being collected? Is there something else that maybe we’re not even thinking about that you guys are on the way to implementing?
Roger: There’s only probably so much I can tell you, but what I can tell you more generally is that because we’re focused on the different industries or verticals that I mentioned, as we embed ourselves in these industries, we will give the industry what they want.
If we’re talking specifically about mortgage, we know that people are interested in the collateral, the credit, and the capacity. If you can think about the types of information that’s out there, I think you can expect a more verticalized report. A credit report that’s not just a credit report, but it’s maybe specific to mortgages.
That will help improve the efficiency on a daily basis. Even having this conversation, we’re very much aware of what different industries need so that’s where we’re headed. At a high level, we’re very focused on providing and solving business needs and challenges.
Lawrence: So like a customization towards the sector that you’re working with. Very interesting. Why is Equifax the leader? There’s other credit reports out there, but the only thing I ever hear of is Equifax.
Joseph: By the way, they don’t even call it a credit bureau. “I’ve got the borrower’s Equifax.”
Lawrence: Exactly. Like, grab me a Kleenex. It’s a tissue, but it’s a Kleenex, right? Why are you guys the leader?
Roger: I think it has to do with the fact that we’ve been blessed with the market share that we have in Canada, as well as the dominance that we’ve had specifically in mortgage. I think we’ve done a really good job, if I might say, in terms of just understanding the various folks in the ecosystem, and partnering with great partners that can help us, as I said, amplify our message.
We’ve been talking about bureaus, but we’re also a leader in fraud identity. There’s a lot of stuff that we’re fortunate to do, but I think that we leverage our data uniquely. I think that Equifax also has unique analytical tools, which we won’t go into here, but also I think that it has a lot to do with our people as well. We really have a strong team at headquarters, but we’re really fortunate to work with partners, like yourselves, as well as customers that are in the mortgage ecosystem.
Joseph: We appreciate that.
Lawrence: What is Equifax’s outlook over the next 10 years, anything that you guys have on the roadmap that you’d want to share?
Roger: Yeah. I think generally Equifax views itself as a consumer-friendly bureau, and we’re focused on the things that matter to consumers. We know that consumers are focused on reducing friction. Making the loan origination process simpler and easier, and digitizing it, quite frankly. We’re currently going through, as I mentioned before, a transformation that is going to see us significantly improve our product offerings and services to both our B2B customers, as well as the end customer.
I think that if you were to look at sort of the future state, you would see what I alluded to, us continuing to really be focused on areas where consumers are focused. Whether that is complete digitization, differentiated data assets, or bringing in data and analytics to provide market insights. I think that that’s what you should expect from us.
Lawrence: Now working with Equifax, working at the banks, it sounds like you kind of worked your way up the ladder. Any piece of advice that maybe you’ve learned from bosses or colleagues in the past that would put someone on the right track? Or maybe a habit that someone has that you thought that’s interesting, and you kind of worked into your life?
Roger: It’s going to sound like motherhood, but the biggest advice I can give is just concede that you don’t know everything, and there is always going to be someone smarter than you in the room.
One thing I’ve learned is that it’s incredible to lean on experience and wisdom. There’s always going to be someone who knows something that you haven’t thought of or who just has been around the blocks a couple times. Being able to leverage that, in terms of whatever an individual that is listening to this might be wanting to do, I think that’s going to be really helpful.
The other thing that I’ve done personally and still try to do is just be always willing to learn. I consider myself to be a lifelong learner. In my various roles, I didn’t know everything. I’ve been fortunate to be blessed with great teams, great partners where I could have that very transparent conversation to say, “Hey, what do you guys think?”
I think that being willing to learn is going to be the key in terms of progressing in one’s career.
Lawrence: I completely agree with you. There’s always someone smarter in the room, isn’t there? It’s a very good point.
Just as a recap, lenders, if you’re not credentialed, reach out to Equifax. It’s important that you get credentialed because, unfortunately, you will not be able to receive credit bureaus the right way, and it’s important that we all continue to work following the rules. It may sound like a pain at the start to go through the process but it’s a must. We have to do it. You heard it here. If you start doing things the wrong way, there are going to be repercussions. Reach out, get credentialed, it’s important. Make sure that confidential information is not being passed around the wrong way.
Joseph: And if you’re getting these bureaus from brokers, you’ve got to be the bigger person and tell brokers they shouldn’t be sending you these bureaus off the grid. They need to be either getting the borrower to pull their own credit bureau temporarily or just strongly recommend to do it the right way by submitting it through a digital system. Again, we further want to tell everyone, please make sure you do get credentialed. Equifax will look after you and get you taken care of.
Lawrence: I think it was informative. It’s definitely something that people need to listen to and understand because the changes are coming, and whether you’re listening to what’s going on or you’re not, the changes are still happening. I’ll just conclude with yeah, follow the rules. You heard it from Roger. You know what you’ve got to do. Reach out, get credentialed, and until next time. Thank you very much.