Equifax rolls out AI-powered tool offering personalized tips to improve credit scores

Equifax Canada, one of two main credit bureaus in Canada, announced on Thursday the rollout of a new AI-powered tool it says will provide consumers with personalized tips to help them improve their credit scores.

The interactive product, called Optimal Path, uses an individual’s credit profile as well as data from millions of borrowers to provide tailored suggestions about, for example, how to improve one’s credit score, the company said. A similar version of it also launched in the United States in June.

The tool represents one of the first examples of how the credit risk industry is deploying artificial intelligence in the service of borrowers.

The AI interface will initially be offered to consumers through banks, lenders, employers and other companies, which may decide to provide the service for free or to charge for it, Sue Hutchison, president and chief executive of Equifax Canada, said in an interview with The Globe and Mail.

Eventually, Optimal Path will be available through the Equifax website as well, Ms. Hutchison said, adding that the company may charge a fee for it.

Similar to an AI chatbot, the interactive tool will allow users to ask questions about their credit scores, Ms. Hutchison said. For example, a consumer could ask how they can boost their credit score by a certain amount in a given timeframe.

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In response, the tool will generate personalized suggestions, she said. For instance, if the borrower’s credit history shows that they recently missed some payments, the AI agent might recommend catching up on those bills and continuing to make timely payments, she added.

The suggestions wouldn’t be a prediction of what will happen to a consumer’s score, but would represent a high-quality estimate based on the individual’s history and Equifax’s vast data set.

“It’s not like financial advice, but it’s a model that can help you improve your score,” Ms. Hutchison said.

Credit bureaus have long been involved in educating borrowers about how credit scores work. Consumers are generally told the main factors that affect scores include how well they’ve kept up with debt payments and, in some cases, other bills; how much they’re borrowing through products such as credit cards and lines of credit, known as credit utilization; the length of their credit history; their recent history of applying for new credit; and the mix of credit products they have.

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But credit bureaus and many credit-risk experts have traditionally warned consumers against taking specific actions – such as applying for new credit or changing one’s utilization rate – based on generalized advice. Part of the risk that such advice poses is that the same course of action will affect borrowers with different profiles in different ways.

For example, applying for a new loan could help one borrower build their credit history and improve their score. By contrast, a borrower who is already using several credit products and has been late on a few recent payments may see their score decrease after a new credit application, which might represent an added risk for a lender.

But asking whether applying for new credit would help or hurt one’s score is still beyond the scope of what the tool is currently best suited for, Ms. Hutchison said.

Still, feedback from both corporate clients that deploy the tool and borrowers who use it will help Equifax to quickly expand the range of suggestions and services that AI can provide, she said.