In Canada if you have outstanding personal credit or open and available credit, this is reported to both Equifax and Transunion. These two companies then use the information received to determine what is called your ‘Beacon’ score.
Beacon scores range anywhere from 300-900, and this number will tell the mortgage lender how much of a risk you are based on past history – the higher the score, the lower the risk. The average score usually hovers around 700.
The criteria and scoring percentage to determine your score is:
|Credit Performance||*Payment History*||35%|
|Current level of indebtedness||*Credit Utilization*||30%|
|Amount of time credit has been in use||*Age of File & Number of Trades*||15%|
|Pursuit of new credit||*Inquiries (Number of Inquiries & Product Mix)*||7-10%|
|Derogatory References||*Public Records, Collections, Judgments, Bankruptcies*||10-13%|
Don’t be discouraged if your score isn’t as high as you thought it would be – a few simple changes and in a matter of months your score can rise drastically. It’s always a good idea to check this before house hunting as well, in case changes need to be made.
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