MORTGAGE CREDIT FILE

ENHANCEMENTS

MARCH 2016

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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

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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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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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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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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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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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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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Equifax Contact Information

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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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QUESTIONS?

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the contents of this document may be reproduced or transmitted in any

form or by any means for external usage without the express written

authorization of Equifax Canada Co. This presentation for informational

purposes only and should not be considered legal advice.