A common question we get at Buyingblock.com is what impacts your credit rating, also referred to as credit bureau and credit report. The beacon score is the number that determines how credit worthy you are in the eyes of lenders. Lenders look at the score as a risk measure. They will base their decision, in part, on it (the other two main factors are your income and job stability).

Beacon scores range from 300 to 900 (900 being the best). Scores of 680 and above are very good. However, we have completed mortgages for consumers with scores as low as 480.

If you want to improve your credit rating, make your payments are on time and you do not max out your credit limits. Also, check your credit report to see if it is accurate. Over 70% of consumers have mistakes on their credit report.

Here are the main criteria for the beacon score formula:

Payment History – 35% of score.
Factors in payments over 30 days late, collections, judgments, and bankruptcies. A single 30-day late payment can drop your score 10-20 points.

Current Debt – 30%.
The amount you currently owe, 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. You generally need at least three accounts over one year old.

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

Number of Credit Enquiries – 10%.
Numerous credit applications in the past 12 months will negatively impact your score. You can address this issue by using mortgage brokers, who pull your credit only once for multiple lenders.

You can check your credit report by going to Equifax.ca or better yet, save the money and get your Mortgage Broker to pull it.

Bruce Whitaker – Buyingblock.com