Credit Score During Pandemic

How will my credit score be affected during the pandemic?

Is there a way I can learn to improve or keep my credit score high?

Let’s explore.

The Coronavirus has had serious effects on people’s health and the economy. Unfortunately, there has been collateral damage effecting homeowner’s credit. It is sad since, through no fault of their own, income has been reduced and consequently it has affected their ability to pay on time. Thankfully, clients deferred their mortgage and it has not affected their credit score. Credit cards and lines of credit have been hit hard during the pandemic and Canadians are using up their limits like never before, which, as we will find out soon, is affecting their previously high scores.

On May 4^th, Equifax Canada decided to change their format for two major reasons. It did not help that a pandemic was going on, which affected their thought process. The major reason of the changes was that Equifax had a serious security breed. Their new ways helps the lender with more information but more importantly, it protects Canadian consumers’ privacy. With the pandemic, banks and mortgage lenders are expecting more delinquencies.

The new system of credit evaluation is based on the following model:

• Payment History: 35%
• Utilization: 30%
• History: 15%
• New Credit Mix: 10%
• Credit Mix: 10%

Other interesting facts…

• 80% of consumers with no late payments score 685 to 850
• 80% of consumers with current delinquency score 450 to 700
• Using your credit card up to the 90% limit will see a drop in your score of 100 points
• Multiple credit checks in a year could hurt your score by 60 points

It is quite apparent; all creditors want better information on their Canadian consumers and they assess risk. I suspect that given the pandemic and the potential of a recession, lenders will be choosy in respect to who they loan to. The consumer wants privacy and protection. Both parties got what they wanted. In fact, consumers also now have a mechanism to investigate a dispute. There is a consumer investigation request, (see attached), that looks into past credit issues. After the security breach, Equifax appears to have risen to the new challenge of safety and transparency.

Robert Floris has been in the mortgage industry for 30 years, including working as a Sales Manager for a major chartered bank. Over his career, he has personally lent over 1 billion dollars and proudly continues to advise and tutor his valuable clients.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

If you would like to apply for a mortgage online, please follow this link.

If you would like to see our Google reviews or leave one yourself, you can do so here.