On June 7, 2016 Canada’s largest consumer reporting credit agency, Equifax Canada, migrated from Beacon 4 to Beacon 9 credit scores. If you checked your score before June 7, 2016, your score could be significantly higher (or lower) than what you might expect.
Here are some important key changes you should know about the changes from beacon 4 to beacon 9;
- There is now a greater emphasis on credit utilization and less emphasis on ‘one off’ missed or late payments -Beacon 9 penalizes consumers greater for carrying higher balances and should a consumer miss a payment it will not affect a score as significantly. Beacon 9 looks more at ‘patterns’ of default as opposed to a simple yes or no delinquency. Beacon 9 also distinguishes between high utilization on different credit products. For example, high limit on a line of credit at lower rates is not penalized as heavily as a credit card at a high rate
- Mortgage payments are now factored into your credit score - Although for some time we have seen most mortgage payments report on the credit bureau, until the migration of Beacon 9, the actual payments have not had any impact your credit score.
- Telephone/Cell phone bills are now factored into your credit score - Although it is nothing new that cell phone companies report on the credit bureau, until the migration of Beacon 9, cell phone payments were not factored into determining your score. This is a significant change, and although the impact may be little (based on the amount and size of the credit) your cell phone payments can now make or break your loan or mortgage approval. Beacon 9 is not new. Some lenders have been using Beacon 9 since 2013, however, as of June 7, 2016. majority if not all lenders, insurers and mortgage brokers have migrated to Beacon 9.
Your score could have increased or decreased significantly. For most consumers their score did increase. I am already seeing clients who were scoring much lower, scoring much higher and hence are now eligible for better rates and products then pre-migration.
If you applied for a mortgage or credit prior to June 7, 2016, and were declined due to credit, you may now be eligible for that same or a better product.
If you would like more information on how your credit score has been impacted by these important changes or if you are interested in applying for a pre-approval, approval, mortgage refinance or simply have any mortgage related questions, get in touch or apply now!
Published by: admin in Advice