Why are Credit Bureau's Important?


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Learn Why Credit Bureau's are important to consumers.

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Why are Credit Bureau's Important?

  1. 1. IMPORTANCE OFCREDIT BUREAUS www.sellingfredericton.com © 2013
  2. 2. Importance of Credit Bureaus Why is a credit check so important to obtain an accurate mortgage pre-approval?A client’s Beacon Scoretells a lender the riskfactor for that client anddetermines the lenderand rates a clientqualifies for. www.sellingfredericton.com © 2013
  3. 3. Importance of Credit Bureaus Beacon Scores RANGE300 600 910 Minimum Score to get good rates with less than 20% down payment www.sellingfredericton.com © 2013
  4. 4. Importance of Credit Bureaus Beacon Scores RANGE300 600 910 Scores less than 600 indicate the client will only be of interest to ‘B’ lenders …. Mortgage rates will increase as credit scores decrease. www.sellingfredericton.com © 2013
  5. 5. Importance of Credit Bureaus Beacon Scores RANGE300 600 910 Some ‘A’ lenders (banks, etc.) will make exceptions for scores under 600 if there is significant down payment and the real estate is excellent. www.sellingfredericton.com © 2013
  6. 6. Importance of Credit Bureaus Beacon Scores RANGE300 600 910 Mortgages for …  Self employed  No income verification deals  Rental properties … may have different credit score requirements www.sellingfredericton.com © 2013
  7. 7. Importance of Credit BureausCalculating Beacon Scores  Current Debts  Payment History  Type of Credit  Credit Enquiries  Age of Accounts www.sellingfredericton.com © 2013
  8. 8. Importance of Credit Bureaus Weighting Beacon ScoresPayment History 30% A single late payment can drop a score 20 points 30% Measures how little you currently owe VSCurrent Debts the amount you could owe if you maxed out your credit limitsType of Credit 10% Loans, credit cards and credit lines are assessed differentlyCredit Enquiries 10% Numerous unrelated inquiries over one year are a problem. 15% The longer a variety of accounts are open,Age of Accounts the better. Do NOT close credit lines or credit cards you no longer use. www.sellingfredericton.com © 2013
  9. 9. Importance of Credit BureausMortgage Broker vs Bank The big benefit to using a mortgage broker/agent instead of a bank is that only one bureau gets pulled by the broker and the report is good for multiple lenders. www.sellingfredericton.com © 2013
  10. 10. Importance of Credit Bureaus Mortgage ratings have recently been included in the credit bureau reporting. While there is no scoring yet, the reporting will show if there have been any late payments.www.sellingfredericton.com © 2013
  11. 11. Importance of Credit Bureaus What lowers a Beacon Score Collection items Bankruptcies Judgments Payments over 30 days late Insufficient payments Using over 70% of a credit line or credit card limits Seeking too much unrelated credit in a short time (applying for 6 credit cards in the same month) www.sellingfredericton.com © 2013
  12. 12. Importance of Credit Bureaus What increases a Beacon Score Paying down credit card balances to under 70% Keeping balances lower than 70% Making full payments on time www.sellingfredericton.com © 2013
  13. 13. Importance of Credit BureausPre-approval starting point The credit bureau score is the starting point of a pre-approval for a mortgage. Eligibility for a specific interest rate and the down payment become apparent when the credit is reviewed. www.sellingfredericton.com © 2013
  14. 14. Importance of Credit Bureaus A credit check at the beginning of the process takes away any bad surprises at the end!www.sellingfredericton.com © 2013