Three industry insiders give their views on this contentious issue.
Arash Fazelipour, President and broker, MyTerms.ca Financial
“What is needed and has been needed for quite some time is a shift in focus by all industry players in educating borrowers on sound credit utilization. Over the years, we have found that the common denominator among borrowers with weak credit scores and poor credit history has been a lack of knowledge and awareness about the factors and behaviours that have attributed to their situation. With tougher guidelines in place, it is crucial to educate clients about the importance of their credit rating. A commitment from the industry as a whole is necessary to make these changes a win-win for all.”
James Wood, Mortgage professional, Invis
“Overall, I believe Beacon 9.0 will be a good tool in the mortgage industry. Change is constant. Beacon 9.0 is here to stay; as brokers, we need to embrace the change. Many of the changes are improvements over the old system. Treating lines of credit differently than other credit instruments such as credit cards is a positive change. The enhanced de-duplication window, lengthened from 14 to 45 days, is fairer for consumers. Using telco trades helps those new to credit to generate scores. Predictions should be more reliable, and those with strong credit will have high scores.”
Ron Butler, Mortgage broker, Butler Mortgage
“The truth of Beacon 9.0 is that clients close to their trade line limits or creeping closer to their limits are negatively affected. Mortgage brokers are experiencing the new phenomenon of seeing Beacon scores of 825, 845, 890, but these high scores are pointless in the mortgage world. Once a Beacon score is over 760, no one cares except the client. Conversely, scores that previously were just over 700, where the consumer had high trade line utilization, dropped below 650. For mortgage brokers, who prefer the highest number of clients to get over a 680 Beacon score, this is not good news.”