Post on 11-Aug-2020
MORTGAGE CREDIT FILE
ENHANCEMENTS
MARCH 2016
Confidential and Proprietary
Mechanism
Need mechanism to
prequalify applications
with same lens lender
uses with adjudication
Time and Resources
Need dedicated time and
resources for applications
required for lender approval
A Broker’s View
1 2
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Confidential and Proprietary
Purpose of Delinquency Scores
Predict
Scores are
systematic and
predictive and enable
the application of
consistent business
rules.
Influence
Scores can influence
the types of products
and interest rates
that are offered to
a customer.
Lenders can assess the likelihood that a customer will meet their financial obligations.
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Confidential and Proprietary
No Standard Score in the Industry
BEACON 4.0
CRP 3.0
BEACON 5.0
BEACON 9.0
ERS 1.1
ERS 2.0
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EquiBundle benefits Introduced April 1, 2015
EquiBundle is a unique
package of scores and
information used to
adjudicate applications
faster, and with greater
accuracy.
It includes the Equifax
credit file, delinquency
and bankruptcy scores,
and new financial data.
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Confidential and Proprietary
EquiBundle Key Benefits
Provides additional delinquency
scores and bankruptcy score
currently being utilized by
Canadian lenders.
Reports mortgage trade information
to help with adjudication processing
and transparency between all
mortgage industry stakeholders.
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Confidential and Proprietary
Files Delivered Before and After April 1, 2015
Uses data from 1997-1999
Safescan®
An automated fraud-screening tool to spot irregularities and confirm misuse in names, addresses, SINs and telephone numbers.
BEACON® 4
Predicts the likelihood of a serious delinquency (90 days past due or worse) within 24 months. Mortgage and Telco trades do not impact BEACON 4 score.
Delinquency Scores
ERS 2.0: Predicts the likelihood of a serious delinquency (90 days past due or worse) within 12 months using data from 2010-2011.
CRP 3.0B: Predicts the likelihood of serious delinquency (90 days past due or worse) within 24 months using data from 2001-2004.
Bankruptcy Score
BNI 2.0: Predicts the likelihood of a consumer filing for bankruptcy within 24 months.
New Data
Mortgage Data
Before After with EquiBundle
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Beacon 9.0 The newest FICO® Score
version in Canada to help
you make credit decisions
with confidence. It allows
you to effectively evaluate
new prospects by predicting
the probability of an
account going “bad”.
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Confidential and Proprietary
Beacon 9.0 Update
UPDATE PRICING STANDARD OTHER SCORES
On June 4, 2016
Beacon 9.0
will replace
Beacon 4.0 in
the mortgage
broker credit
file delivered
via Expert
and Morweb.
Changes from
$0.45 to $0.70
for the new
Beacon 9.0
score.
Beacon 9.0
will be the
new standard
for all brokers.
Beacon 4.0
will no longer
be available.
All other
scores and
information
will remain
the same.
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Confidential and Proprietary
BEACON 9.0 vs BEACON 4.0
New Reason
Codes Additional reason
codes to support the expanded handling of Lines of Credit
Otherwise, the previous reason codes are still in effect
No reason codes mention mortgages
BEACON 9.0
Evaluates at a trade level rather than consumer level
Consumers who went bad on isolated accounts treated less severe than those who go bad on all accounts (model development)
FICO research
On credit
characteristics
Thin files riskier (lower scores) than in previous versions BEACON 9.0 assigns
fewer positive points to thin files because fewer accounts means less demonstrated positive repayment behaviour
Prior derogatory files riskier (lower scores) than previous versions
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Confidential and Proprietary
BEACON 9.0 vs BEACON 4.0
Minimum Score Criteria Categories of Predictive
Variables (Same)
Basic rules have not changed
BEACON 9.0 will score more files due to the inclusion of the Mortgage and Telco trades
One trade item open over last 3 months
Not deceased
Payment history
Outstanding debt
Credit history length
Pursuit of new credit
Credit mix
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Confidential and Proprietary
Payment History
100% History 15%
Payment
History 35%
Utilization 30%
10%
New Credit
10%
Credit Mix
Predictive Variables That Factor into a Score
Delinquency scores do not say that a specific individual is a good or bad customer
Lenders have their own unique adjudication strategies
No magic cut-off rule
Credit score is one factor in assessing an individual’s credit worthiness
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Confidential and Proprietary
Score Information & Timing
BEACON 4.0 BEACON 9.0 CRP 3.0 ERS 1.1 ERS 2.0
Predicts
delinquency
within (months)
24 24 24 12 12
Geography No No No Yes No
Score Range 300-900 300-900 320-880 300-900 300-900
Reason Codes 4 Numeric 4 Numeric 3 Alpha
1 Scorecard
3 Alpha
1 Scorecard
3 Numeric
1 Scorecard
Development Feb 1997
Feb 1999
Jul 2009
Jul 2011
Dec 2001
Jan 2004
Jun 2007-08
Sep 2007-08
Dec 2007-08
Mar 2008-09
Jun 2010-11
Sep 2010-11
Dec 2010-11
Minimum
Scoring Criteria
Trade reported
within 6 months
& Trade open for
at least 3 months
Trade reported
within 6 months
& Trade open for
at least 3 months
3A: Trade
reported within 6
months & open
for at least 6
months + no
discharged
bankruptcy
3B: Same as
ERS
Trade reported
within 24 months
or inquiry within
24 months &
Trade on file
Trade reported
within 24 months
or inquiry within
24 months &
Trade on file
Uses Mortgage
/ Telco No / No Yes / Yes No / No No / No Yes / No
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Confidential and Proprietary
Impacts of Behaviour on Delinquency Score
BEACON 4.0 BEACON 9.0 CRP 3.0 ERS 1.1 ERS 2.0
Retention
Period
How long can
an inquiry
affect the
score
36 months 12 months 36 months 36 months 36 months
Buffer
Window
How long
Auto and
Mortgage
inquiries take
to be posted
30 days 30 days none none 30 days
De-dupe
window
How long
Auto and
Mortgage
inquiries
count together
as one
14 days 45 days 14 days 14 days 30 days
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Confidential and Proprietary
EquiBundle April 1, 2015
Summary
The additional information provided by EquiBundle:
Delinquency scores
ERS 2.0: Predicts the likelihood of a serious delinquency (90 days past
due or worse) within the next 12 months. Using data from 2010-2011.
CRP 3.0B: Predicts the likelihood of a serious delinquency (90 days past
due or worse) within the next 24 months. Using data from 2001-2004.
Bankruptcy Score
BNI 2.0: Predicts the likelihood of a consumer filing for bankruptcy within
the next 24 months.
New Data
Mortgage data.
BEACON 9.0: June 4, 2016
Beacon 9.0 to replace Beacon 4.0.
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Confidential and Proprietary
Equifax Contact Information
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Confidential and Proprietary
APPENDIX
Confidential and Proprietary
BEACON 9.0 vs. BEACON 4.0
Client: All Canadian Lenders
Portfolio: All Trades in Wallet
Geography: Canada
Observation: September 2014
Performance: September 2015
BEACON 9.0 BEACON 4.0 BEACON 9.0 BEACON 4.0
64.2% 62.7% 62.9% 61.1%
64.9% 60.7% 68.3% 62.8%
Account Management (Existing Accounts at Time of Scoring)
BEACON 9.0 Consumers Cumulative % Balance ($000s) Consumers Cumulative % Balance ($000s) Bad Rate Goods to Bad
Unscorable 394,048 $5,337,325 36,323 $123,187 9.2% 9.8
300 to 562 1,277,852 5.0% $32,929,046 632,818 42.9% $12,178,727 49.5% 1.0
300 to 612 2,555,704 10.0% $103,245,411 927,896 62.9% $22,192,962 36.3% 1.8
300 to 668 5,111,407 20.0% $320,385,151 1,186,699 80.5% $32,779,599 23.2% 3.3
300 to 704 7,667,111 30.0% $555,747,120 1,304,853 88.5% $37,401,470 17.0% 4.9
Scorables 25,557,036 100.0% $2,055,463,118 1,474,040 $43,502,153 5.8% 16.3
BEACON 4.0 Consumers Cumulative % Balance ($000s) Consumers Cumulative % Balance ($000s) Bad Rate Goods to Bad
Unscorable 1,877,629 $62,229,104 207,458 $1,267,420 11.0% 8.1
300 to 593 1,203,673 5.0% $70,098,218 535,120 41.1% $16,277,978 44.5% 1.2
300 to 641 2,407,345 10.0% $167,322,603 795,747 61.1% $24,169,582 33.1% 2.0
300 to 692 4,814,691 20.0% $427,883,856 1,032,883 79.3% $33,552,244 21.5% 3.7
300 to 725 7,222,036 30.0% $745,124,351 1,132,855 86.9% $37,802,643 15.7% 5.4
Scorables 24,073,455 100.0% $1,998,571,339 1,302,905 $42,357,920 5.4% 17.5
Validation and Odds Chart
BEACON 9.0 BEACON 4.0vs.
All Accounts
Account Management
Acquisition
% Bad Records Bottom Decile
Negative Performance
Delinquency 90+ or bankruptcy or collection
K-S
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Confidential and Proprietary
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