Credit Issues

What is a credit score?
A credit score is a statistical formula that translates personal information from your credit report and other sources into a three-digit score. For example, when you fill out a loan application, pieces of information from the application along with information from your credit report will be used to compute a score that indicates to the lender the statistical probability that you will become delinquent on the loan.
Some scores that lenders use are based strictly on the data in your credit report; these are known as "bureau scores". The most widely-used bureau scores in Canada were developed by Fair, Isaac and Co., headquartered in San Rafael, California.
It is important to understand that a credit score is only one criterion that a lender will use in making decisions. For example, in mortgage lending, the lender will take into account the property being purchased and the homeowner's equity. Many lenders look at their relationship with the customer, which may include other financial services. Each lender will have its own policies and you should feel comfortable asking a credit institution about these. Our work with credit grantors has shown us that most lenders want their customers to have a better understanding of their lending processes.

 How do lenders view my score?
Your credit score is an important indicator of your creditworthiness. In general, the higher your score, the lower the probability that you will become delinquent on credit extended to you. And while many lenders use bureau scores to help them make lending decisions, each lender will base its decision on more than just the score.
Lenders use your credit score to determine if you are a good candidate for credit and likely to pay your bills. In the event of bankruptcy, it will also help them determine what type of repayment plan is best for you.
Because your credit report is updated every day, your bureau score is recalculated continuously. So your credit score from a month ago is probably not the same score today

  What is used to calculate my score
1. Payment history - Indicates whether you have made your credit card payments, loan payments and other payments on time
2. Amounts owed - Compares how much you owe to your credit limits with various lender
3. Length of time in file - Indicates how long you have had credit account
4. New credit - Shows how often you are looking for new credit and how you handle accounts you have recently opene
5. Type of credit - Considers the type of loans you have - car loans, lines of credit, credit card balances

*Note: Telephone accounts are also rated so be sure to be prompt with payments and be prepared to live up to your contract.Always remember the Credit Score is calculated by a computer and is not concered with "WHY" bills have not been paid it just calculates how they are being paid.
If you are late or over a limit on a charge card there can be serious repercussions to your beacon score.

 Will inaccurate information in my credit report affect my credit score?

This will depend upon what information is wrong. If the inaccurate information is used as part of the score calculation, your score will be affected. The majority of information used in the score calculation is found in the Credit Information, Public Record and Collections sections of your credit report.

We encourage all consumers to request and review their credit report on a regular basis. By doing this, you can ensure that your report contains information that accurately reflects your credit history. You have the right to dispute any discrepancies by immediately notifying the credit reporting agency. We want to ensure that your credit report is as accurate as possible and will work with you to resolve your issues.

Consumer Relations Equifax Canada Inc. Box 190 Station Jean-Talon Montreal, Quebec H1S 2Z2 Facsimile: (514) 355-8502

 What can I do to improve my credit score?

Pay all of your bills on time. Paying late, or having your account sent to a collection agency has a very negative impact on your credit score.

Try not to run your balances up to your credit limit. Keeping your account balances below 75% of your available credit may also help your score.

Avoid applying for credit unless you have a genuine need for a new account. Too many inquiries in a short period of time can sometimes be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties, or overextending yourself by taking on more debt than you can actually repay. A flurry of inquiries will prompt most lenders to ask you why. However, most scoring formulas will not penalize you if, for example, you are shopping for the best mortgage rate or the best car loan.

**Equifax Consumer Services Canada**

Below you will find useful information on your Credit Report and Credit Score, which is used by the Lenders to decide what type of mortgage and what rates you qualify for. The better the score, the more mortgage options you have. If you have any questions, please contact me at any time.  

neil@mortgageman.ca  or Phone: 250 861 8758       

For further information or to view your credit report, visit: www.econsumer.equifax.ca

What is a credit report?

A credit report is a history of how consistently you pay your financial obligations. A credit report is created when you first borrow money or apply for credit. On a regular basis, the companies that lend money or issue credit cards to you (banks, finance companies, credit unions, retailers, etc.) send the credit reporting agencies specific and factual information about their financial relationship with you - when you opened up your account, if you make your payments on time, if you miss a payment, or if you have gone over your credit limit, etc.

Equifax Canada receives this information directly from the financial and retail institutions and retains it to help other lenders make decisions about granting you credit. Because your credit report contains all the information received from your lenders and provides a picture of your financial health, other lenders will request your report when they are determining whether or not to grant you a loan. Your credit report is a history that will help them determine what kind of lending risk you are - if you are likely to repay your obligation on time or not.

 What is in my credit report? 

Below is a list of the major sections found in your credit report:

• Personal Identification - Includes key identification information, such as your name, address, date of birth and Social Insurance Number (SIN)
• Consumer Statement - Allows you, the consumer, to add a brief comment about any information in your report
• Credit Information - Provides details of your credit accounts and transactions and shows if payments are being made on time
• Banking Information - Includes information on your bank account and NSF cheque history
• Public Record Information - Contains information about secured loans, bankruptcies and/or judgments
• Third-Party Collections - Contains information about any involvement with a collection agency trying to collect on a debt
• Inquiries - Includes all organizations or individuals that have requested a copy of your credit report in the past three years
•  

*Note: Mortgage information - Details about your existing mortgage(s) may appear in your credit report. Mortgage information is not used to calculate your credit score since it is not reported by all lenders.

 How is information in my credit report used?

 Credit information is gathered by credit reporting agencies, sometimes called credit bureaus. There are two major credit reporting agencies in Canada: Equifax Canada Inc., and TransUnion of Canada. Governed by provincial and federal laws, credit reporting agencies store and maintain credit information about individual Canadian consumers for use by members of the credit reporting agency. Members include banks, finance companies, auto leasing companies, credit card companies and retailers. 

Credit grantors update individual credit reports regularly by providing information to credit reporting agencies about their customers' credit and payment activities. This ensures that credit reports remain up-to-date and as complete as possible. Other sources of the information contained in your credit report can include public records from courthouses across the country and collection agencies.

Who can access my credit report?

Federal and provincial laws are very specific regarding who can review your credit report and for what purpose. A company or individual may only obtain a copy of your credit report with your consent or after informing you that they will be reviewing your report. Additionally, an individual or company must have a legitimate business reason and a permissible purpose, as stated in government regulations, to obtain your credit report.

When you apply for a loan or credit card you are usually asked to complete and sign an application form. An application normally includes written consent giving permission to the credit grantor to check your credit report when you first apply and throughout the life of the account. In addition to your name, an application often asks for your date of birth, your current address and a previous address if you've recently moved - information that helps to locate your credit report at a credit reporting agency.

Each time a member of the credit reporting agency requests your report, the request is noted on your report as an inquiry and kept for 3 years. You can therefore see a record of who has requested your credit report and when.

A credit reporting agency may only provide a copy of your report when the request relates to the extension of credit, collection of a debt, housing rental or an application for employment or insurance purposes. Since your credit report contains only factual information, it is important to remember that each of the companies requesting your credit report will interpret those facts in its own way to arrive at a decision.            

**Equifax Consumer Services Canada**

Neil “Mortgage Man” McJannet                                                                            

250-861-8758                                                                                                             

neil@mortgageman.ca                                                                                           

Here is some further information on what some lenders are saying about Beacon Scores and how they break down:

• 35%               Your payment history – Pay your bills ON TIME – automating your payments can also help.
• 30%               How much you owe – Keep balances on credit cards and other revolving accounts below 50% of the limit. The       lower the better. This says you use credit wisely – you do not abuse it. It is better to have 2-3 cards with a $5,000. limit and owe only $2,000 on each then to have one card at $7,000. and owe $6,000. on it.
• 15%               Length of your credit history. - Rather than let old cards go dormant, charge a late of pair of jeans to them once a month and then pay it off right away. No activity lowers your score.
• 10%               Your new credit. - Don’t open unnecessary new accounts. And if you are rate shopping for a new car or mortgage loan, do it within a two week period: Multiple requests could bring your score down.
• 10%               Your mix of loans. You can’t do much to change this – except to get a charge card if you don’t have one. Variety of credit and its good use can increase your score.

In Canada beacon scores range from 300 to 900, 900 is the most credit worthy client and lenders in Canada like a beacon score of at least 625 -650.

Get your game plan in place as soon as possible to start to increase that beacon score and feel free to call us with any questions you might have..

Here is a very good message about Credit Scores"

https://www.canadianmortgagetrends.com/2019/05/credit-score-boost-at-renewal-can-save-thousands/