[Y]our credit report contains information about you that tells others how you handle credit. It lets potential creditors and lenders know how responsible you are with credit. There are several aspects to your credit that make up a credit score. This score is a number that tells others at a glance how creditworthy you are. So, what is a Beacon score?
There are three major credit agencies that provide lenders with a look at your credit history. One of them is Equifax. They use an algorithm to come up with a number that indicates your level of credit responsibility. This is called a Beacon Score.
A Beacon score is made up of information about you. This includes your payment history and if you have ever been late. It also weighs in how late you have been, whether it was 30 days, 60 days, or 90 days and how many times for each. How much debt you are currently carrying also affects the Beacon score. Different types of debt carry a different weight. This may include installment loans, credit cards, and mortgages.
Another aspect to the Beacon score is how long you have had accounts and how many new applications you have made recently for new credit. This shows up as inquiries on your account. Your credit score affects your ability to get approved for credit and influences what interest rate you are charged.
If this sounds a lot like the FICO score, that’s because it is. In fact, it is basically the same thing, but each credit reporting agency has a name for its own score. The Beacon score is what is used by Equifax. Experian is FICO and Trans Union is Empirica. The agencies may or may not use the same algorithm to come up with the score. When lenders look at your scores, they may look at all three scores and choose the middle one to determine your credit worthiness.
By understanding what makes up your credit or Beacon score, you can work to improve it before applying for credit. While your credit report doesn’t include your credit score, you can get it online. Just remember that the score a lender sees may be different from the one you are given. There are many different algorithms used to get your credit score.
