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  • Credit Know The Score - How Canadian Credit Bureau Works!!

    By Kuljit Singh

    We know that most lenders pulls "Credit Bureau" generated by "Equifax" however RBC pulls Trans Union only. We thought you would like to know some information about Beacon Scores and their calculations that could possibly assist you when looking at you're clients' "Credit Bureau".

    The following is an "at-a-glance" indicator that lenders use to estimate your probability of successful loan repayment (ever look at someone's bureau and see good trade lines currently but they end up having a low beacon score................below are the 5 different categories used to calculate beacon scores).

    Beacon scores range from 300-900

    *1) Type of Credit - 10% (credit cards, bank loans, etc.) Installment loans are better, then Bank R/C cards, then department store and finance company accounts.

    2) Applications for new credit or credit inquiries - 10% - Only look back 6 months and any mortgage inquiries within a 14 day period only count as 1 hit.

    3) Late payments, bankruptcies, collections and judgments - 35% - The more recent these items have occurred, the greater the impact.

    4) Current Debts - 30% - This refers to utilization of credit limits. IE: Credit cards that have balances close OR over their limits will have a bigger impact.

    5) How long accounts have been opened and established - 15% - The longer the history with trade lines...the better. So, when closing accounts after a consolidation, it is in the clients best interest to leave open the older accounts and close the newer ones.

    As you can see, #3 and #4 contribute to 65% of the beacon score so you should be able to get a fairly decent idea when looking at the Trans Union bureau what to expect.

    FYI...Financial Institutions can also put their own internal measurements to further break down the Credit Bureau even more and therefore, you sometimes get different beacon scores.

    Kuljit Singh Janjua, AMP
    President's Club Member 2005
    The Mortgage Alliance Company of Canada
    RightBroker - RightMortgage - RightPlace
    7025 Tomken Road, Suite 207
    Mississauga, ON L5S 1R6
    Tel: 416-473-SAVE (7283)
    Fax: 416-987-5-987
    Website:" rel="nofollow">LINK


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