Credit Scores

Beacon scores are the score given to you by the credit collection companies, Equifax and Trans Union, and are built by grouping data into predictive characteristics in five categories. These scores are used by financial institutions and credit companies in order to determine your credit worthiness. While each credit scoring model evaluates credit file information differently, the following factors are commonly considered:

Payment history (approximately 35% of your score is based on this category)

• Payment information on accounts such as credit cards, credit lines; retail department store accounts; installment loans, auto and student loans; finance company accounts, home equity and mortgage loans
• Public record and collection items such as bankruptcies, foreclosures, wage attachments, liens, judgments, and delinquencies reported to collection agencies
• Details on late or missed payments, public record items, and collection items (particularly how late the payments were, how much was owed, and how recently and frequently it occurred and how many accounts are delinquent in relation to all accounts on file)
• The number and type of accounts that have been paid on time

Amounts owed (approximately 30% of your score is based on this category):

• The amount owed on different types of accounts
• Whether you are showing a balance on certain type of accounts
• The number of accounts with balances
• How much of the total credit line is being used on credit cards and other revolving credit accounts
• How much of the installment loan account is currently owed, compared with the original loan amount
• The credit line amount for revolving accounts.

Length of credit history (approximately 5-7% of your score is based on this category):

• How long your credit accounts have been established (the score considers both the age of your oldest account and most recent account opened)
• How long different types of accounts have been established
• How long it has been since there was activity on certain account
• How long it has been since a judgment public record item has been on your credit file

New credit (approximately 10-12% of your score is based on this category):

• How many new accounts you have
• How many new accounts you have in relation to all accounts in your credit
• How many recent requests for credit you have made, as indicated by inquiries to credit reporting companies, in connection with transactions initiated by you (the score does not take into account requests a creditor has made for your credit file or score in order to make a pre-approved credit offer, or to review your account with them, nor does it take into account your request for a copy of your credit file
• Length of time since creditors made credit file inquiries
• Total balance of recently opened accounts

Type of credit used (approximately 15% of your score is based on this category):

• What kinds of credit accounts you have and how many of each

Information NOT used in calculating your score:

Your race, color, religion, national origin, sex, or marital status
Your age
Your salary, occupation, title, employer, date employed, or employment history
Where you live
Certain types of inquiries such as promotional, account review, insurance, employment-related inquiries, or inquiries when you request your own credit report
Any information not found in your credit file
Any information not proven to be predictive of future credit performance

It is important to note that most lenders are also looking for 2 separate sources of credit, for at least $1000 that have been active and paid on time for at least 12 months.

The minimum credit score for an insured mortgage is 600 however most lenders are looking for at least 650.

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