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What is this 'Beacon Score' anyway?
 April 24 2015     Posted by


For years lenders tried many different types of criteria to determine, in advance, which loans would be good and which ones might go bad, with varying degrees of success. In the end it was eventually determined that the best indicator of how a person would pay their debts in the future was - how they paid them in the past!

A computerized formula was devised by a company called Fair Isaac and Co from the US which is applied to the information carried on your credit bureau report. It applies weighting to such factors as: late payments; the amount of time credit has been established; the amount of credit used versus the amount of credit available; the length of time at present residence; the type of credit the individual has availed themselves of and any negative credit information such as bankruptcies, charge-offs, collections, etc.

The beacon score ranges from 300 to 900 (the higher the better) with Canada’s current legislation requiring a minimum score of 600 for at least one of the borrowers.        


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