Improve your beacon score

Whether you have poor credit, excellent credit or something in between, there is always room for improvement on your beacon score.

For starters, and most obvious, make your payments on time.  Whether it’s a credit card, mortgage or personal loan from your bank, it is fundamentally important to keep your payments from becoming overdue.  About 35% of your score is based on this category.

How much do you owe?  It is important to ensure that you are not maxed out on your credit cards.  Keeping your balance at or below 75% of your limit will bode well for a good beacon score.  Some people feel that they can go up to their limit and pay down the whole amount every month.  The problem with this is that you never know exactly when the creditor is making their report to the credit bureau.  They may report a day before you bring your balance to zero.  Then even if you pay off your balance, the damage is already done.  About 30% of your score is based on amounts owed.

Above two items make up 65% of your beacon score.  Let’s discuss the other 35%.
How long is your credit history?  Don’t cancel your oldest card just because the rate is a percentage point higher than a ‘new card on the block’.  Credit grantors like to see established credit.  Flipping from one card to another when a special is offered will not benefit your beacon score.  About 15% of your score is based on how established you are in the wonderful world of credit.

Credit Enquiries makes up 10% of your score.  Numerous credit applications in the last 12 months is not a good thing!  This is another reason why it’s a good idea to use a mortgage broker.  One credit bureau pull by a broker takes care of all lenders.

Types of Credit rounds out the final 10% of your score.  Having a variety of types of credit is looked upon favourably by lenders.  Types of credit include credit cards, personal loans and Lines of Credit.  However, it’s not recommended to take out a personal loan, for example, simply because you don’t have one already.