What goes into the perfect credit score, and how high of a score do you need for a mortgage? Elise Hildebrandt with The Mortgage Centre has provided some answers:
- Q: How high of a score do I need to qualify?
- A:Your beacon score is what the lenders look at. "A" lenders - basically the major banks - won't lend to anyone with a score less than 600. If you're less than that, you'll be going to a "B" lender where the rates will be higher.
- Q: How do I increase my beacon?
- A: Set up as many monthly payments as you can to be paid automatically - this way you'll never have a missed or late payment. If a bill can't be paid automatically, put a reminder on your smartphone to let you know the day they need to be paid. It's really important to be consistent with you monthly payments. Also, try to keep your credit usage to a maximum of half of what your credit limit is.
- Q: What makes up my beacon score?
- A: Your beacon score is composed of several components. Your payment history, amount owing, credit history, inquiries for new credit, and types of credit used all factor into your score.
Overall, you need to be aware of your credit usage. Lenders generally want to see a 2 year history in 2 different types of credit products in order to establish a good credit rating. Credit cards aren't always bad! They're a great way to establish a good rating - as long as you're responsible with them. Consistency in payment is key. Pay off as much as you can each month - try not to carry a balance month to month, this will help your rating and also decrease the amount of interest you have to pay to the credit card company!