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If you use credit of any sort, Equifax (EFX) knows about you. The $5.6 billion firm is one of the big three credit bureaus, firms responsible for keeping track of your credit history and selling that data to your lenders to help manage risks. Because of the concentrated nature of the credit monitoring business and extremely high barriers to entry, Equifax has a huge competitive advantage right now.
Because most lenders pull credit reports from multiple providers, Equifax and its peers typically have huge overlap in their customer lists. And since credit report pulls don't make up a huge chunk of the costs of lending, there's little incentive on the part of banks to reduce their reporting to just one firm. In fact, the risk-reward tradeoff is much more attractive for those who opt to source creditworthiness data from all three bureaus.
Emerging markets and analytical tools are two areas where EFX has big growth potential. The firm's business in the U.S. is mature, and hamstrung by consumers' avoidance of credit right now; if EFX can get a foothold in an emerging economy where new consumers are using credit, it should be able to expand its margins.
At the same time, EFX's customers are looking for new and unique ways to measure and reduce risk. Analytical tools such as the Decision 360 platform should keep customers hooked on Equifax for their credit data needs. Brinker International