Many of my clients wonder how and why their credit scored only a fair or average rating when they have paid all their bills on time and never missed a payment. The reality is that even though missed payments are a vital factor to determining your overall credit score, it is not the only factor that takes effect on your overall rating.
An article in the Financial Post discusses some of the other determinants when evaluating your credit or beacon score. The truth is that both Equifax Inc. and TransUnion LLC are both private companies and will not reveal the precise formula that they use to evaluate and calculate your total credit score, but we do know most of the factors that contribute to it. There are of course the obvious ones that we can all anticipate i.e., missed payments, collections or anything derogatory that will have a significant negative impact to your credit worthiness. There are also factors such as too many inquiries on your credit bureau (e.g., when you shop your own mortgage around from bank to bank), credit balances that have achieved or surpassed their limit or even not enough credit.
It is always important to perform your own credit report pull through www.equifax.ca and have a professional, such as your mortgage broker review and explain your credit situation. With regular check-ups on your credit score, you can learn what adjustments you can make to improve your score so that when the time comes that you need mortgage financing a low credit score won’t be the reason you don’t qualify for those great rates, terms and conditions.BACK TO NEWS FEED