Understanding and Keeping Your Credit Score Healthy
One of the least understood financial tools that a consumer has that affects their ability to borrow and at what rate is the credit score commonly known as the beacon score. This is a number that is assigned to you based on various criteria that a lender looks at to see if you are an applicant that they consider being financially able and credit worthy to repay a loan or mortgage. In Canada there are 2 credit rating bureaus – Equifax or Transunion. Each has their own scoring system and they may or may not contain the same financial information. Equifax has a number system from 300 to 900. A number above 700 is considered good while a number in the 300-400 range is very poor. Prime mortgage lenders look for a number from 620 to 650 to consider a candidate. There are alternate or “B” lenders that will go as low as 500 and private lenders do not look at the credit score. The credit score is made of 5 different components: a) Payment history 35% b) Debt