Beacon Score VS Credit Score - Underwriting Fundamentals 101
Beacon Score VS Credit Score
Today's lesson is super important to understand.
So what happens is a lot of times is people will say, Oh, my credit score was awesome, or my credit score is terrible and I can't qualify for a mortgage.
And that might be true.
Or they think the score so good that they can qualify for a mortgage again, and they might feel that way, but they actually cannot.
The banks and the lenders, they don't use your credit score.
They use your beacon score.
People ask me all the time what that is.
So the beacon score is your average of all the credit reporting agencies in Canada combined, and then you get your score.
That's what the lenders use.
When you get your Equifax score, that's your credit score.
There is a key difference between your beacon score vs credit score - and lenders care about that difference.
Most people think that that suffices. And usually it's a good recommendation and it's a good like quality standards to apply.
But the issue is, is that not all lenders in all institutions report to Equifax.
I've seen people that had a collection on their TransUnion, and their TransUnion was terrible.
They didn't even know about this collection.
And Equifax was spotless.
Right. But when we get their mechanics, the average of the two, it worked out that they didn't qualify for the mortgage.
Now they just cleared up the collection and move forward. But this is why you never know, right?
You can't just say, oh, here's my credit score, I'm good for a mortgage. Doesn't work like that.
That's why I always take the time to remind my clients that is is the beacon score that the lenders use, not the credit score.
So a lot of my clients, when they do a pre-approval as well to be like, Oh, I don't want to get my credit check, It's not accurate unless we do check it because we need your beacon score vs credit score, right?
We can't use your credit score, unfortunately, because that's not always accurate. There could be things on the other credit reporting agencies that are negatively impacting your ability to borrow.
Talk to a Mortgage Professional
If you are still unsure about what your beacon score range is or how it gets used for a mortgage, book a call with us.
The truth is it is much easier to give a specific example to show what is a good beacon score and why lenders would choose to use your beacon score vs credit score report.
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