TORONTO, May 7 /CNW/ - Equifax Canada today released the latest data from
an economic report developed by its Consulting Solutions team revealing that
"surprise" consumer insolvencies have increased by over 5% in February 2009
compared to February 2008.
Equifax Canada defines a "surprise" consumer insolvency as a consumer who
paid the required payments on all of their credit products within 30 days of
the payment due date one month prior to becoming insolvent.
In February 2009, 71% of all dollars of outstanding credit that was
declared insolvent during the month of February was considered current (i.e.,
up-to-date) in January 2009. This represents an increasing trend of higher
"surprise" insolvencies from consumers that were considered current in the
The Equifax Canada report also looked at the same statistics by credit
product types. The report revealed that the highest increase in "surprise"
insolvencies was found in Revolving Loans (i.e., Lines of Credit). Of all
dollars declared insolvent during the month of February 2009, 78.3% of these
insolvent dollars were considered current in January 2009. This represents an
increase of 9.2% on a year-over-year basis.
The results for some of the other credit products are as follows:
- Installment Loans (i.e., personal loans excluding mortgages): 78.0% -
an increase of 6.0% on a year-over-year basis
- Credit Cards: 63.4% - also an increase of 6.0% on a year-over year
In addition, Equifax Canada data indicates that the amount of credit
outstanding when a consumer becomes insolvent has been significantly
increasing. In February 2009, the average amount of credit outstanding
(excluding mortgages) at the time of insolvency was approximately $35,000.
This represents an increase of 14.0% as compared to February 2008. Nearly 40%
of the total outstanding amount relates to credit cards.
"These statistics indicate that credit providers need to be especially
vigilant in managing the risk in their existing portfolios. Delinquency or
behavioural scores alone are not sufficient in detecting surprise
insolvencies. Dual strategies incorporating both delinquency and bankruptcy
risk are highly recommended", said Nadim Abdo, Vice President of Equifax
Canada Consulting Solutions.
Equifax Canada counts both bankruptcies and consumer proposals
(renegotiating unmanageable debt loads) as insolvencies. In addition, Equifax
Canada counts joint insolvencies made by spouses as two separate insolvencies
since the information is added to two separate consumer credit files.
This is the second of a series of Equifax Canada news releases that will
feature unique financial and demographic data, which can help businesses
target opportunities and make informed decisions. If you would like to find
out how Equifax Canada can use its unique insights to help you make better
business decisions, please contact us at 1-800-278-0278 or visit our website
About Equifax Inc. (www.equifax.com)
Equifax empowers businesses and consumers with information they can
trust. A global leader in information solutions, we leverage one of the
largest sources of consumer and commercial data, along with advanced analytics
and proprietary technology, to create customized insights that enrich both the
performance of businesses and the lives of consumers.
Customers have trusted Equifax for over 100 years to deliver innovative
solutions with the highest integrity and reliability. Businesses - large and
small - rely on us for consumer and business credit intelligence, portfolio
management, fraud detection, decisioning technology, marketing tools, and much
more. We empower individual consumers to manage their personal credit
information, protect their identity, and maximize their financial well-being.
Headquartered in Atlanta, Georgia, Equifax Inc. operates throughout the
U.S., Canada and 13 other countries in North America, Latin America, and
Europe. Equifax is a member of Standard & Poor's (S&P) 500 Index. Our common
stock is traded on the New York Stock Exchange under the symbol EFX.
For further information:
For further information: Craig Hillyer, AVP, Product Management &
Innovation, at (416) 227-5290 or visit our website at www.equifax.ca