Buyer
Information
Beacon Score 101
When I say beacon
score, I am referring to your credit score. Yes, that magical number that all
lending institutions use to categorize your financial affluence. I have written
this article to help those who do not understand the method to Equifax's madness,
Equifax being the agency that determines your credit (beacon) score. Just so you
know, a Beacon Score is a snap shot indicator that lenders use to estimate your
probability of successful loan repayment. Beacon Scores range from 300 to 900.
Thousands of people get their credit checked everyday by banks, brokerages,
debt collectors etc…. but they never really get to see their own report.
The following is a list of information that is shown on your credit bureau.
| Personal
Information | | Credit
Information | | • | SIN | | • | Date
of birth | | • | Address | | • | Marital
status | | • | Age | | • | Employment
information |
| | | • | Every
trade line reported to
Equifax Inquiry history | | • | Banking
information including
history and balances | | • | Record
of secured loans,
bankruptcies/ judgements | | • | Details
on outstanding
collections owed to creditors |
|
Basically,
your credit bureau shows what type of debt you have, how long your accounts have
been opened for, the amount of credit inquires and any late payments. When it
comes to late payments, it is time to get familiar with credit bureau terminology.
Your credit bureau contains certain number-letter combinations such as R1 and
I1. These combinations specifically tell the lender about your repayment history,
they also indicate the types of credit that you use (they are classified as either
Revolving or Installment). Revolving Credit (R) - Revolving accounts vary
each month depending on how much you use them. Credit cards, charge cards and
department store cards are all examples of revolving credit. Installment
Credit (I) - Installment accounts have set amounts that must be repaid each month.
In these cases you will have arranged to borrow specific amounts of money up-front
with an arrangement to repay the loan in set amounts over a specified period of
time. Examples include car loans, student loans and mortgages. On each
trade line, there is a corresponding letter-number combo. Each trade line represents
an account you have had in the recent past or is currently active. Beside each
trade line is the total amount, the balance and your monthly payment. If your
account is up to date and you have been paying the monthly requirements as agreed,
there will be a "1" recorded for that month. If you miss another consecutive
payment on the same account there will be a "2". For example if you
have a car loan and you are 60 days late you will most like report an I2 on your
bureau for that specific trade line. When that account has reached R-9 or I-9
beside it, then the lender will file a judgement in the court to sue for the money
owed or the lender will sell that account to a collection agency. There
are so many factors that can affect your credit score not to mention corporate
neglect. Here are some things you need to think about. Firstly, avoid having too
many inquiries in a short period of time. Be careful what contracts you sign,
some credit contracts may classify you as a "late" if you pay one day
after the due date. Try to get a policy that gives you a 30-day grace period so
you can easily keep up with your bills. A good way to avoid missing a payment
is to set up automatic withdrawal, just in case you lose track. Never allow your
balances to exceed 75% of your limit just don't max out. On an ending note, remember
your credit responsibility is your responsibility so always check your credit
bureau every year and report any errors immediately to Equifax.
You can
contact Equifax and request a copy of you credit bureau by calling 1 800 465 7166
or go to www.equifax.ca. | 
