Equifax CEO pushes innovation

It may be tempting during tough times, but Equifax CEO Rick Smith says it’s a big mistake to cut strategic spending on the future, like R&D.

Rick Smith

Rick Smith

“If you cut off your lifeline to future growth, you’re dead,” said Smith, who took over the reins of the Atlanta-based information-technology company in 2005. “Any leader can manage the short-term or the long-term. True leadership is managing both.”

To do that, Smith, 50, is trying to expand Equifax’s reach. After spending 22 years at GE, he knows he inherited a company with a gold mine of consumer data that creates the ubiquitous credit reports and scores (more on that below). But, he also knows CEOs are paid to grow companies, not just watch over them.

“Five years ago, I saw a wonderful franchise with a fantastic customer proposition,” Smith said in a recent interview. “I want to protect our good assets, while bringing in new thinking for future innovation.”

The key question for Smith: “How can I add more value” by splicing and dicing data in new ways? Equifax’s data bases currently include 572 million consumers, 200 million employee files and 81 million businesses.

What’s more, Smith recently got word that officials in India — not a small country — want Equifax to help build its credit system for a burgeoning middle class of 250 million people.

To come up with new computer-based uses for information, Smith has assembled a team of about two dozen company execs with different areas of expertise. They meet regularly to brainstorm — and then refine promising ideas.

The year before Smith took over, Equifax’s core credit-reporting business accounted for 78 percent of the company’s revenue. It now represents 44 percent, because of new products and acquisitions.

“A diverse model allows me to grow in all market cycles,” Smith said.

But growth for Equifax will not come without controversy. For example, the acquisition of Talx, which helps employers process claims for unemployment benefits, has been criticized by some jobless workers who say the company is a source of errors and delays.

Also, data in the hands of one central source can be abused.

But, Smith said: “We’re a highly regulated company. … Someone has given us permission to access their file.”

As for the core business itself — credit reports and scores — there’s been considerable anxiety on my blog among consumers struggling to make ends meet. Some appear way too worried about their credit score in the face of a more urgent issue — like not knowing where their family will be sleeping because of a pending foreclosure or eviction.

Is there too much paranoia about credit scores, which can affect everything from loan and job applications to insurance premiums?

I’m not sure a three-digit credit number should have so much impact in the toughest economy in decades. In fact, a credit score can decline, even though consumers improve their financial situation by reducing debt, closing credit-card accounts and building savings.

But Smith said credit scores help consumers understand their circumstances. “The economic crisis has given them incentive to get their financial house in order.”

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18 comments Add your comment

Greg Fisher

May 11th, 2010
9:15 am

Who told you that employers use credit scores?

[...] “Is there too much paranoia about credit scores, which can affect everything from loan and job applications to insurance [...]

#1 Foxy Lady

May 11th, 2010
10:41 am

Pushing innovation? He should push complacency. And Hair Club for Men memberships.

Maj. Wood

May 11th, 2010
10:41 am

Why is something that is so significant to modern living (your credit score) completely opaque to outsiders?

Trying to correct your score is a worse than trip to the DMV. Trying to improve and manage your score is a mystery that is controlled by for-profit companies at the expense of the consumer.

Like the banks, the credit scoring racket needs serious reform.

shadow7071

May 11th, 2010
11:13 am

In my opinion using a credit score for employment is highly discriminatory. In this country it is against the law to discriminate in hiring. The law is there to protect all of us from racial, sexual, ethnic, religious, and age bias in the workplace. Now we’re discriminating against people with low credit scores. I ask, where is the outrage. In my opinion every law firm worth its salt should be lining up to take Equifax and the other monitoring agencies to court. There is probably a class-action suit just ready for some smart firm to take on.

Steveratoolie

May 12th, 2010
11:07 am

Shadow is correct to a degree. I think. They want to demonstrate responsibility. Thats the assumption. Of course it goes much deeper than that. Some of you will understand. Some will not. I am not an educator. Thats just not my work. What pesters me is. Credit scoring for insurance. The credit business is the foundation for well. Very high interest rate credit cards. Now you tell me where is the responsibility for an industry that if you make the monthly payment. Has a potential interest rate revolving or over 300% on the balance. They are both together. Credit scores and credit cards. One might say subsidiary.

Now with mandatory insurance. Everyone has to have it. We can weed out the deadbeats. Still have loads of money being taken in every month. You show me precedent for mandatory insurance. A corporate entity. Being mandated by the state. Collection wise you can loose your license. Further than that if you don’t pay you can be put in jail. If you try to drive of course. Uninsured motorist is what 30 dollars for six months? So thats not the problem. The auto industry has the right of course to make sure you are insured. However that is corporate. So 100 accidents a month for 2 million motorists on the road. Is justification for State Enforced auto insurance? Nice going.

Tony

May 12th, 2010
1:46 pm

Turn off cnbc and go to financialcombat.com for real financial info you’re not getting anywhere else. It will prepare you for the future.

shadow7071

May 12th, 2010
4:09 pm

A three digit number is not a metric of responsibility (particularly in today’s economic climate). Past work history, experience, education and job related qualifications are the measures of employment. Any organization that gets caught up in this trap of vetting people with a credit score is on a slippery slope. A credit score is too ambiguous and denying employment because of a low score will get you in court. As an industry analyst I’ve been watching this now for a couple of years and what I see are law suits and class-actions (against larger organizations) on the horizon.

Steveratoolie

May 13th, 2010
5:55 am

Amen Shadow. What I would like to see is class action lawsuits against the insurance industry. For this mandatory insurance racket. May not be possible because the state is involved however. It is a racket. Does absolutely nothing for public safety. So what is public safety. The police. The government doing enforcing mandatory insurance payments. Uninsured motorist costs 30 dollars a year. Everyone gets it anyway.

Steveratoolie

May 13th, 2010
6:12 am

Also I would not mind if the state issued the insurance that would make sense. In Georgia alone the monthly take for the mandatory insurance racket nets them 130 million dollars a month. That should cover just about any fender bender loss for the insurance industry. So let me ask you does the profit they make.
Justify the premiums everyone pays to cover losses? The profit sure justifies them being in that business and eating lobster and steak. While the rest of us try to make our insurance payments to stay out of jail and have a way to get to work.

Lacy Thompson

May 13th, 2010
7:47 am

The Equifax Inspector “made up a story” to get private information but “Inspector said to me he really could not put the above in Report form. Thompson did not know he was from RTC”. Federal Judge order the victim to pay for Equifax’s Lies & Deceit.

Steveratoolie

May 13th, 2010
10:24 am

Heres the thing. I understand the credit reporting. I have no problem with that. My complaint is that. If you take 10000 out on a credit card pay the monthly minimum. The payment at 10% or even 4%. Pay it off at the monthly minimum. The real interest rate with the payments because its revolving. Is near 300%. Is anyone awake out there? Do the state legislators even care? How much can those credit card people get away with. Without anyone saying anything about it. Been going on forever. Big Paulie and the Mafia have a better deal.

The Dogfighter Returns

May 13th, 2010
4:43 pm

Steveratoolie

May 13th, 2010
10:24 am
Heres the thing. I understand the credit reporting. I have no problem with that. My complaint is that. If you take 10000 out on a credit card pay the monthly minimum. The payment at 10% or even 4%. Pay it off at the monthly minimum. The real interest rate with the payments because its revolving. Is near 300%. Is anyone awake out there? Do the state legislators even care? How much can those credit card people get away with. Without anyone saying anything about it. Been going on forever. Big Paulie and the Mafia have a better deal.
—–
You apparently do not understand the concept of APR.

If you don’t like the interest rate, pay cash. no one is forcing you to use a credit card.

Steveratoolie

May 13th, 2010
6:16 pm

Oh you bet I understand APR. Its a made up name they use for 30 year ams and revolving payouts. So tell me Mr. Math if what I pay out is 200% over what I borrowed what do you call that. You can couch it in clever math and thieving terms. When Jesus went into the temple and drove those kind of people out they killed him for it. Save it for the tourists.

The Dogfighter Returns

May 13th, 2010
7:10 pm

Steveratoolie

May 13th, 2010
6:16 pm
Oh you bet I understand APR. Its a made up name they use for 30 year ams and revolving payouts. So tell me Mr. Math if what I pay out is 200% over what I borrowed what do you call that. You can couch it in clever math and thieving terms. When Jesus went into the temple and drove those kind of people out they killed him for it. Save it for the tourists.
—–
Instead of reading about the bible pick up a basic finance book. Just stick to cash if you are having a difficult time understanding that if your principal payments are not large, the bulk of your payments will go towards paying interest.

Steveratoolie

May 13th, 2010
7:58 pm

Try something really basic pal. You borrow 10k and wind up paying 30k to pay it off. Get it. Borrow 10k have to pay 40k to pay it off. Now if you want to sell me undercoat for my car. I would get it. Your obviously part of that racket or you would not be responding. If you lied about being part of it. I would not be surprised. Because someone thats trying to steal like that I don’t like. You want me to be part of your future ok. Because I don’t like people that destroy other peoples futures. With thieving financial schemes and so-called products. The Bible is relevant in this case. Jesus throwing the money changers some would say lenders out of the temple courts is very relevant. Unless your some loan selling conniver or maybe you live on Mars. I doubt you live on Mars. You want to be my friend stop ruining peoples lives smiling in their faces. Pretending to be their friend. Drowning them in debt with your basic finance con line. Some might be a little more sophisticated out here than you know.

Steveratoolie

May 13th, 2010
8:23 pm

By the way the mafia does charge interest as do all loan sharks. The interest is very high and yes dog you can pay them off early to many times with no prepay penalty. Loansharking is a simple concept. Its as old well not quite as old as moneylending. Same thing in a lot of cases only they don’t break something they ruin your credit.

Joe

June 17th, 2010
2:59 pm

He should focus on customer service. I just called their personal solution department after finding charges on my credit card from Equifax that I didn’t purchase. Extremely bad customer service….I could not even understand half the things he was telling me. Seriously I thinkg the call was route to India. They really don’t know what they are doing. I won’t trust them for anything.