Money Matters Toronto

Factors That Effect Your Credit Score

When it comes to your credit score nobody knows the exact algorithm the reporting agencies use to determine your beacon score. However, we've got a pretty good idea of which areas are the most important. I have broken them. The 5 factors are:

• Payment History
• Current Debts
• Age Of Accounts
• Type Of Credit
• Credit Enquiries

Payment History - 35%- This is the most important category. Factors which affect your score include the  number of payments over 30 days late, and how recently they happened. Collections, judgments, and bankruptcies fall into this category. A single 30-day late payment can drop your score 15-20 points.

Current Outstanding Debts - 30% - The second most important consideration is your credit outstanding. It considers how much you currently owe (in absolute terms and compared with your credit limits), how many creditors you owe money to, and how much you could owe if you maxed all your available credit.

Age of Accounts - 15% - The longer your accounts have been opened the better. The lender views credit as character so the more history they have the better. For mortgage purposes you usually need 2 accounts open for at least two years.

Type of Credit - 10% - Bank loans, credit cards, and revolving credit accounts all impact you differently.

Credit Enquiries - 10% - Numerous credit applications in the past 12 months is a no-no. That's another reason why you want to work with a mortgage broker like myself. I run one credit application and have the potential to go to dozens of lenders on your behalf. If you shop around going from bank to bank each bank will individually pull your report from the credit bureau.

 

If you would like to view your credit report you can request one from Equifax.

 

I hope this helps you out... feel free to contact me with any further questions or comments. I invite you to call me at Tridac Mortgages if you have any questions about your mortgage. I would be happy to help you. Ask for Chris. 416.461.0204. Toronto Mortgage Broker.

I Hate Paying Mortgage Interest- Episode #3 Credit

How High Should My Beacon Score Be To Get A Mortgage?

Your Equifax Beacon Score tells lenders how much of a risk you are, and hence it determines how much you'll pay for your next mortgage. So it's important to know what affects it.

Beacon scores range from 300 to 900 (a perfect score). The average Canadian adult has a Beacon near 650.

Many people think you need to be in the 800's to get great mortgage rates. That isn't the case. Only 11% of Canadians rank above 800, and it's virtually unheard of to see a Beacon near 900. All you really need is 650 or above to get the best mortgage rates.

If your score is below 620, you're what lenders call a "B" client (i.e. there's issues with your credit that banks won't like). 1 out of 5 Canadians are in this boat, but don't despair! There are a number of lenders and programs which still give Canadians the ability to borrow at competitive rates.

If you would like to know your credit score then visit the Equifax Canada website. There are a number of different products offered by Equifax to view your score. If you just want to view your score the cost is $23.95CDN.

If you would like to discuss your mortgage options please call our Toronto Mortgage Office at 416.461.0204... speak to Chris at Tridac Mortgages.