Brokers question Equifax data

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Brokers are questioning Equifax’s debt estimations, following an announcement that it believes Canadian household debt comprises two thirds home loans.

“I wonder if this amount is based on the snapshot reporting collected by Equifax? For those of us that always pay our credit card balances in full every month, the balances reported on our credit report are inaccurate as it shows the balance on the day reported,” James Robinson of the Mortgage Centre wrote on MortgageBrokerNews.ca. “The result could be a significant overstating of debt levels in Canada. I do not use a credit card as a debt facility, but simply a way to keep my money in my possession a little longer.”

Stephen Poloz’ statement Wednesday that the interest rate will stay at 1 per cent also raised concern about the level of household debt. New figures from Equifax show a $1.5 trillion debt burden for Canada’s households, with the debt load rising 7.4 per cent in the three months to the end of September compared with a year before. That works out at an average debt of $20,891 per person excluding mortgages.

However, unlike the BoC, the credit agency says that it is not concerned about the levels as consumers are controlling their debt well. Of the $1.5 trillion owed two thirds is mortgage debt, totalling $985.1 billion.  

Meanwhile, brokers question whether mortgage debt should be reported to Equifax.

“Except for the dreaded … collateral mortgages and HELOC mortgage information shouldn't be reported to Equifax,” Toronto-based Omer Quenneville wrote. “How would they know two thirds of household debt is mortgage?”

Related:
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  • Eric Putnam on 2014-12-05 1:20:11 PM

    Wonder if stats are based only on the data reported to Equifax as some lenders use Trans Union exclusively. Interesting interview done this week by CBC with Benjamin Tal of CIBC about their own report on consumer debt http://www.cbc.ca/news/business/canadians-are-paying-down-debt-not-any-more-cibc-report-says-1.2857989

  • Jorian de Vries on 2014-12-05 2:24:55 PM

    This hair splitting doesn't mitigate the fact that credit is easier than ever to get and that our "have-to-have-it-now" society has become increasingly dependent on debt.

  • Eric Putnam on 2014-12-05 2:50:45 PM

    Jorian I agree Its well documented that for past several years "take home" incomes for many is not keeping up with inflation. While mortgage refinancing has become tougher to RBC reported last month there is $260 billion owed on personal lines of credit by Canadians (up from $205 billion owed in Dec 2010) and $76 billion owed as of Oct/13 on credit cards. Imagine the impact on Canadians if gas was still @ $1.50 litre combined with even a 2% increase in the prime rate? Here is "The Wealthy Barber's opinion" -https://www.youtube.com/watch?v=BTa9FWuAD1E

  • Steve on 2014-12-05 4:29:03 PM

    I agree that the debt totals are skewed if Equifax is only receiving debt updates but not payment updates. It really is a weakness in the system. How many times have brokers seen stale balances reported on the bureau, but low balances on the actual online statements. I find that lenders are quick to report use, but slow report payment... my opinion

  • Tracy Luciani Price on 2014-12-05 8:01:16 PM

    I wonder if they are using the collateral mortgage values of 100 to 125 percent of value of properties which the banks and some credit unions are registering when the homeowner has actually utilized much less in their calcs for mortgage debt..again skewed numbers

  • RHÉAU SÉGUIN on 2014-12-07 9:52:10 AM

    I HAVE A CLIENT NOW THAT AS 8 ERROR ON IS CEDIT REPORT ACCOUNT THAT ARE PAID IN FULL WITH CAISSE POPULAIRE AND WITH CAPITAL ONE AND NOT UP TO DATE IN CREDIT BUREAU.BECAUSE OF ALL DOES ERROR MY CLIENT BEACON IS AT 609 ,AND SHOULD BE OVER 680. BY THE TIME HE PROVES AL THIS IT WILL TAKE 2 TO 3 WEEKS BEFORE IS SCORE WILL BE IMPROVE,BACK TO NORMAL THE MEMBERS SHOULD BE NOTIFIED BY THE CREDIT BUREAU ABOUT THOSE IRREGULARITIES,AND TO BE MORE RESPONSIBLE ABOUT THERE CLIENTS CREDIT

  • RHÉAU SÉGUIN on 2014-12-07 9:52:13 AM

    I HAVE A CLIENT NOW THAT AS 8 ERROR ON IS CEDIT REPORT ACCOUNT THAT ARE PAID IN FULL WITH CAISSE POPULAIRE AND WITH CAPITAL ONE AND NOT UP TO DATE IN CREDIT BUREAU.BECAUSE OF ALL DOES ERROR MY CLIENT BEACON IS AT 609 ,AND SHOULD BE OVER 680. BY THE TIME HE PROVES AL THIS IT WILL TAKE 2 TO 3 WEEKS BEFORE IS SCORE WILL BE IMPROVE,BACK TO NORMAL THE MEMBERS SHOULD BE NOTIFIED BY THE CREDIT BUREAU ABOUT THOSE IRREGULARITIES,AND TO BE MORE RESPONSIBLE ABOUT THERE CLIENTS CREDIT

  • RHÉAU SÉGUIN on 2014-12-07 9:52:14 AM

    I HAVE A CLIENT NOW THAT AS 8 ERROR ON IS CEDIT REPORT ACCOUNT THAT ARE PAID IN FULL WITH CAISSE POPULAIRE AND WITH CAPITAL ONE AND NOT UP TO DATE IN CREDIT BUREAU.BECAUSE OF ALL DOES ERROR MY CLIENT BEACON IS AT 609 ,AND SHOULD BE OVER 680. BY THE TIME HE PROVES AL THIS IT WILL TAKE 2 TO 3 WEEKS BEFORE IS SCORE WILL BE IMPROVE,BACK TO NORMAL THE MEMBERS SHOULD BE NOTIFIED BY THE CREDIT BUREAU ABOUT THOSE IRREGULARITIES,AND TO BE MORE RESPONSIBLE ABOUT THERE CLIENTS CREDIT

  • RHÉAU SÉGUIN on 2014-12-07 9:52:14 AM

    I HAVE A CLIENT NOW THAT AS 8 ERROR ON IS CEDIT REPORT ACCOUNT THAT ARE PAID IN FULL WITH CAISSE POPULAIRE AND WITH CAPITAL ONE AND NOT UP TO DATE IN CREDIT BUREAU.BECAUSE OF ALL DOES ERROR MY CLIENT BEACON IS AT 609 ,AND SHOULD BE OVER 680. BY THE TIME HE PROVES AL THIS IT WILL TAKE 2 TO 3 WEEKS BEFORE IS SCORE WILL BE IMPROVE,BACK TO NORMAL THE MEMBERS SHOULD BE NOTIFIED BY THE CREDIT BUREAU ABOUT THOSE IRREGULARITIES,AND TO BE MORE RESPONSIBLE ABOUT THERE CLIENTS CREDIT

  • Omer Quenneville on 2014-12-07 4:36:02 PM

    Rheau Seguin, you're repeating yourself :)

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