What is a Credit Score? How it works? How to repair it?

How does the Credit/Beacon Score number work?

  • This three digit number is a statistical formula that takes your personal credit information from your credit report
  • Scores range from 300 – 900
  • The ‘Beacon Score’ is branded by Equifax
  • FICO – Fair, Isaac & Co (created to assess profitability)
  • Everything counts: age, address, phone number, dependents, length of employment with same employer
  • Utilization = 35%
  • Type of credit = 10%
  • Level of indebtedness = 30% (65% mark)
  • Inquiries = 10% (kept on record for 3 years)
  • Length of credit history = 15%
  • Might want to keep trades that have a long and positive history
  • Employer on credit bureau
  • Equifax charges customer for electronic delivery but not via mail
  • Bad debt stays on for 7 years

Want to get your credit report for free? Click Here


What do the credit categories include?

(These percentages are based on the importance of the 5 categories for the general population. For particular groups – for example, people who have not been using credit long – the importance of these categories may be somewhat different.)

Payment history: 35%

  • Account payment information on specific types of accounts including: credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.
  • Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and delinquency.
  • Severity of delinquency and amount past due on delinquent accounts or collection items
  • Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
  • Number of past due items on file
  • Number of accounts paid as agreed

Amounts owed: 30%

  • Amount owing on accounts
  • Amount owing on specific types of accounts
  • Lack of a specific type of balance, in some cases
  • Number of accounts with balances
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of credit history: 15%

  • Time since accounts opened
  • Time since account activity

New credit: 10%

  • Number and proportion of accounts that are recently opened, by type of account
  • Number of recent credit inquiries
  • Time since recent account opening(s), by type of account
  • Time since credit inquiry(s)
  • Re-establishment of positive credit history following past payment problems

Types of credit used: 10%

  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)


How to read the Nine Point Credit Rating Scale?

  • R0 Too new to rate; approved but not used.
  • R1 Pays (or paid) within 30 days of billing; pays account as agreed.
  • R2 Pays (or paid) in more than 30 days, but not more than 60 days, or one payment past due.
  • R3 Pays (or paid) in more than 60 days, but not more than 90 days, or two payments past due.
  • R4 Pays (or paid) in more than 90 days, but not more than 120 days, or three or more payments past due.
  • R5 Account is at least 120 days overdue, but is not yet rated 9.
  • R6 (Code 6 does not exist.)
  • R7 Making regular payments under a consolidation order or similar arrangement.
  • R8 Repossession (indicate if it is a voluntary return of merchandise by the consumer).
  • R9 Bad debt; placed for collection; skip


How to Improve your Credit Score?

Do you carry balances that are collecting late payments and have been ignored?

If they are showing up on your credit report and you are planning to purchase a home in the near future, make sure you bring them up to current status as soon as possible.

Don’t want to use a credit card any more or deal with a specific company?

Do not close existing credit card accounts!!!  … Believe it or not, the credit history (especially accounts that have been opened long time ago) is a good thing to have!

Got an offer in the mail to increase your limit?

Take it! This can, in turn, will reduce the overall debt ratio. You can also ask your credit provider to increase your available lines of credit/credit limits, but only do this if your credit card company can do that without a hard credit inquiry.

Do you see errors in your report?

Send a request to the credit bureau (Equifax or Transunion) to delete any unpaid debt that is incorrectly charged to you or things that should have been removed that you have already paid. They have an obligation to reconcile this within 30 days. If you see items on your report that are less than two years old and you have the money to pay it off now, mark the back of your payment check with the following notation: “Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record.” If necessary, you can use this cancelled check as proof of the transaction in the event the outstanding debt is not removed promptly and interferes with the closing of your loan.


How to correct inaccurate information on credit bureau Equifax Canada?

Contact Consumer Relations Department
Box 190 Jean Talon Station, Montreal, Quebec H1S 2Z2
CALL: 1 800 465 7166 between 8:00am and 5:00pm ET


Did you know?

  • We can finance clients with bad or no credit if they have enough down-payment
  • We can help homeowners pay off high interest credit cards with equity loans
  • We will obtain exceptions from the banks for a client with imperfect credit credit history as long as their score is within the guidelines
  • We advise clients with bruised credit history to improve their score and qualify for a mortgage
  • Find out what our clients say about us! Click Here


Need More Details? Just email or call us today 1-855-881-1010



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