What is a Beacon Score?
June 2nd, 2009, Written By: Kerri Randall
You already know what a credit score is, but what about a Beacon score? If you’re thinking, “Oh great, something else I need to worry about keeping in shape,” fear not. Beacon score is a phrase that is simply interchangeable with FICO score, also known as your credit score.
Credit Score Software
Beacon is the name of the scoring software used specifically by Equifax to calculate your credit standings. Experian uses FICO, and TransUnion uses Empirica. The formula used in each version is different, which is why you’ll have a different score from each bureau. Also, the software for all three bureaus is occasionally updated and can result in a change in your score even if you have minimal changes in your history.
Credit Scoring Formula
It seems that the mathematical formula for determining your credit score is locked away in a secret dungeon. However, you can expect certain items on your account to be weighted similarly to the following:
- Late payments, bankruptcies, collections, and similar negative history will affect about 35% of your score
- Your current open accounts will affect about 30%
- The length of time you’ve had the accounts will affect about 15%
- The type of credit (revolving, investment, store card, etc.) will affect about 10%
- Applying for new credit or hard inquiries regarding loans will affect about 10%
Keep Your Score High
You’ll want to avoid late payments on any of your accounts, as that can lead to the bigger problems of bankruptcy and collections. Keep your balances low in comparison to your credit limit, and avoid applying for new credit cards too often. Similarly, if you’re going to apply for a large purchase such as a house or a car, check your credit score (or your Beacon score, or FICO score, or Empirica score…or ideally, all three) a few months before meeting with the lender. Don’t give them a chance to see any errors or negative activity that you can fix ahead of time. If you wait too long, that hard inquiry and subsequent denial will hurt your score even more.
So don’t panic if someone asks what your Beacon score is. Just panic if it’s low, and start taking steps to fix it!
Categories: Credit Score Information
