It may have just gotten harder for your clients to qualify for a mortgage … or has it?
“The big thing is that [Equifax] is looking more at credit utilization; at the end of the day, if people are running close to their balances, it’s going to impact their credit score even heavier than it already does,” Karen Monteiro, a franchise owner with Mortgage Alliance
, told MortgageBrokerNews.ca. “They changed the algorithms to put more emphasis on credit utilization.”
Equifax unveiled a new BEACON score, which will be delivered on the Expert and Morweb platforms, earlier this month.
BEACON 9 is “the newest FICO Score version in Canada to help you make credit decisions with confidence,” according to the user guide provided to brokers, which has been obtained by MortgageBrokerNews.ca. “It allows you to effectively evaluate new prospects by predicting the probability of an account going ‘bad’.
The new change was discussed in a general meeting at Mortgage Alliance, according to Monteiro, who said the new rules score will more heavily weigh credit utilization.
However, it may not be that simple. It seems more clarification about how the change will impact clients is needed.
The “basic rules” have not been changed for BEACON 9, according to the user guide; but BEACON 9 will score more files due to the inclusion of mortgage and telco trades.
“We’re using a new primary delinquency score called BEACON 9 and that was released Saturday, June 4,” Eric Poblete, strategic account executive with Equifax Canada, told MortgageBrokerNews.ca. “So from there, we’ve been doing education sessions about the differences and maybe in those education processes … maybe they’ve put an emphasis on that. It’s really no different. It’s a different delinquency score, but the rules are still the same.
“BEACON 9 is a different score, so potentially there could be changes in regards to some of the items. There are differences.”