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The beacon score is a very important part of the mortgage application process. Your Equifax Beacon Score tells lenders how much of a risk you are by your past debt history.
Beacon scores have a range from 300 to 800+ with the average Canadian being in the 700 range. The perception out there is in order to obtain a great interest rate you require an 800 plus beacon score. That is not that case — only 11% of all Canadians reach that score.
We can provide you with the best available interest rate with scores in between 680-700 and still obtain decent rates with scores below that range. The difference will be stronger requirements around income and previous delinquencies if any.
The minimum credit score for insured mortgages (less than 20% down payment) is 600 and that has been in effect since October 2008. This allows for a wider range of Canadians to reach the dream of home ownership.
The advantages of using a mortgage broker are that we deal with more than 50 lenders and can find mortgages for all Beacon scores. If your score is below 600 and you have had some issues with credit the banks are more cautious, but don't worry we have obtained mortgages for our clients with beacon scores as low as 450. There are of course other items required for these and we work with you to help you obtain the mortgage.
So basically, we can assist with mortgages for first time homebuyers, refinancers, self employed, rental properties and repeat purchasers with a wide range of Beacon scores.
If you want to improve your credit rating to help you obtain a better rate, here is the main criteria surrounding how it is calculated:
Payment History 35%
Factors in the frequency of and number of payments over 30 days late, collections, judgments, and bankruptcies. A single 30-day late payment can drop your score 15-20 points.
Current Debts 30%
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 obtained all your available credit.
Age of Accounts 15%
The longer your accounts have been opened the better. The requirements are active accounts used within the last three months showing a balance that has revolved.
Type of Credit 10%
Bank loans, credit cards, and revolving credit accounts all impact your score differently.
Credit Enquiries 10%
Numerous credit applications in the past 12 months affect your score significantly and is definitely not advised. This is the advantage of using a mortgage broker as your credit is only pulled once for multiple lenders.
If you would like more information about credit scores or being pre-qualifying for a mortgage, please call 250-862 1806 or email [email protected]
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
