Beacon scores range from 300 to 900, with 900 as the highest possible score. Anything over 600 is generally considered as a good credit score. A person with a Beacon score below 520 will often be turned away from the bank.
The credit score is comprised of the following percentages:
35 for late payments, bankruptcies, collections and judgments,
30 for current debts,
15 for how long accounts have been opened and established,
10 for type of credit, such as credit cards and bank loans, and
10 for applications for new credit card enquiries.
Here are some common situations, causing poor credit scores and recommended remedial steps
chronic late payments — a simple consolidation of all balances into one low monthly payment, focusing repaying debt only
Maxing out credit cards — do not exceed 50 per cent of your credit limits
Errors — pull your own credit reports from Equifax and Transunion at least twice a year and check all the information in the reports.
Often, mortgage payments do not go on credit reports. So even if you pay your mortgages on time, you may still need to increase your credit score. Home Trust offers a one-charge mortgage product where there is a regular fixed payment to own a home and the added feature of an Equityline Visa card. This Visa provides the flexibility of using the equity in a client’s home to secure credit up to $250,000. In the meantime, regular activity on the Visa card and paying bills on time improves the Beacon score.
Home Trust also launched a Credit Assist product in Ontario in October 2010 as a one-year solution where debts are consolidated into one to help consumers repair bruised credit. After one year, clients should be able to renew their mortgage to a prime rate with more favourable terms.
Further tips for credit improvement
– avoid over-applying to creditors and lenders.
– avoid applying to a number of lenders to find the best deal.
– Never ignore small payments, but no matter what the balance is, it should always be paid on time.
Generally, moving to A mortgage (good credit score) from B mortgage (poor credit score) simply takes time and sound advice. All that requires is a kind of financial discipline or changing the existing habits. It may be difficult but not impossible.
For further information and advice contact: Nargis Nanji at 416 471 1148.
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