| How You May Damage you CREDIT RATING Without Knowing It. DOES APPLYING AT SEVERAL BANKS AFFECT YOUR CREDIT? YES!!!! IT LOWERS YOUR "BEACON" SCORE WHICH IS YOUR CREDIT RATING |
CREDIT RATING WARNING
How You May Damage you CREDIT RATING
Without Knowing It.
DOES APPLYING AT SEVERAL BANKS AFFECT YOUR CREDIT?
YES!!!! IT LOWERS YOUR "BEACON" SCORE
WHICH IS YOUR CREDIT RATING
We may assume that as long as we pay our bills on time, we have a good credit rating. We
are shocked when we apply for credit and we are not approved, or only approved for a small
limit due to a low credit "score", This credit score is known as the "beacon" score in the
credit industry.
Most people are not even aware of such a scoring system and certainly not how the score is
developed Unfortunately most of us do not take the time to actually look at our own credit
bureau until we apply for credit and discover that there is a concern.
Most people are unaware that our credit rating is affected by much more than just how
promptly we pay our bills.
Scenario 1, Important factor is the number of times you apply for credit. When you shop
around for the best rate for financing on a vehicle, or for a mortgage, you may apply with a
number of institutions and by doing so it may negatively affect our credit score. It may
indicate to a lender that you are active credit seeker, which of course is not necessarily the
case.
Solution: We, as mortgage specialists that deal with the entire banking community, will
initiate only one credit inquiry on your behalf. We then forward it to all the lenders we are
considering as a viable option for your needs
Scenario 2. Another factor that influences is your credit is the number of times you reach or
exceed your credit limit. These days when travel points are so appealing, many of us will
choose to make a large purchase on our credit card. Not realizing that just by exceeding 50%
of our available credit limit may actually result in a drop of our credit score. Common sense
would tell us that Lenders should see us as a good credit risk if we actively use our credit
facilities and then pay them off. However the lowering of our score could actually tell them
the opposite. Furthermore the perception that lenders should be delighted with the interest
they are collecting on our outstanding balances would make it reasonable to assume that
they would want to lend us more. Instead large outstanding balances on credit cards or
personal lines of credit may indicate to a lender that we are not reducing debt responsibly
and therefore further credit should be denied.
In the mortgage industry, we are working more and more with lenders who are basing
much of their decision for approving a client's mortgage application on the beacon score.
It seems difficult for a borrower to understand that it isn't just the ability to repay or even
the previous track record that is more important than this particular credit score.
Scenario 3. Investigating one's own credit rating is beneficial to discover errors of reporting
or even identity theft. No one thinks it will happen to them, but identity fraud is on the rise
and therefore taking steps to protect oneself is important. By viewing your own report you
may discover that there are accounts that you have not initiated and but for which you could
be financially responsible. However discovering inaccuracies in your credit report may not
necessarily be the result of identity theft, but could simply be a mistake by a lending
institution or by the Credit Reporting Agency. A error on your file can be as simple as a
confusion of someone else's name with yours. But if you are not aware, it will affect your
credit score.
Solution: To review your own Credit Report please contact Equifax Canada Inc. at
1.800.465.7166 or visit their website www.Equifax-Canada.ca
Without Knowing It.
DOES APPLYING AT SEVERAL BANKS AFFECT YOUR CREDIT?
YES!!!! IT LOWERS YOUR "BEACON" SCORE
WHICH IS YOUR CREDIT RATING
We may assume that as long as we pay our bills on time, we have a good credit rating. We
are shocked when we apply for credit and we are not approved, or only approved for a small
limit due to a low credit "score", This credit score is known as the "beacon" score in the
credit industry.
Most people are not even aware of such a scoring system and certainly not how the score is
developed Unfortunately most of us do not take the time to actually look at our own credit
bureau until we apply for credit and discover that there is a concern.
Most people are unaware that our credit rating is affected by much more than just how
promptly we pay our bills.
Scenario 1, Important factor is the number of times you apply for credit. When you shop
around for the best rate for financing on a vehicle, or for a mortgage, you may apply with a
number of institutions and by doing so it may negatively affect our credit score. It may
indicate to a lender that you are active credit seeker, which of course is not necessarily the
case.
Solution: We, as mortgage specialists that deal with the entire banking community, will
initiate only one credit inquiry on your behalf. We then forward it to all the lenders we are
considering as a viable option for your needs
Scenario 2. Another factor that influences is your credit is the number of times you reach or
exceed your credit limit. These days when travel points are so appealing, many of us will
choose to make a large purchase on our credit card. Not realizing that just by exceeding 50%
of our available credit limit may actually result in a drop of our credit score. Common sense
would tell us that Lenders should see us as a good credit risk if we actively use our credit
facilities and then pay them off. However the lowering of our score could actually tell them
the opposite. Furthermore the perception that lenders should be delighted with the interest
they are collecting on our outstanding balances would make it reasonable to assume that
they would want to lend us more. Instead large outstanding balances on credit cards or
personal lines of credit may indicate to a lender that we are not reducing debt responsibly
and therefore further credit should be denied.
In the mortgage industry, we are working more and more with lenders who are basing
much of their decision for approving a client's mortgage application on the beacon score.
It seems difficult for a borrower to understand that it isn't just the ability to repay or even
the previous track record that is more important than this particular credit score.
Scenario 3. Investigating one's own credit rating is beneficial to discover errors of reporting
or even identity theft. No one thinks it will happen to them, but identity fraud is on the rise
and therefore taking steps to protect oneself is important. By viewing your own report you
may discover that there are accounts that you have not initiated and but for which you could
be financially responsible. However discovering inaccuracies in your credit report may not
necessarily be the result of identity theft, but could simply be a mistake by a lending
institution or by the Credit Reporting Agency. A error on your file can be as simple as a
confusion of someone else's name with yours. But if you are not aware, it will affect your
credit score.
Solution: To review your own Credit Report please contact Equifax Canada Inc. at
1.800.465.7166 or visit their website www.Equifax-Canada.ca
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