Beacon score is a credit score used by Equifax to determine creditworthiness, calculated by an algorithm developed by FICO. Scores range from 300-850, with scores above 750 considered very good. Credit scores do not reflect ability to repay, but rather the likelihood of repayment. Scores can vary between credit bureaus, so it’s important to review credit reports periodically.
A beacon score is a type of credit score used by Equifax, one of the major credit bureaus. The original beacon score has been largely superseded by the next-gen score, but the term is still used in some regions. The higher the score, the more creditworthy a consumer is, with high scores indicating a high probability that the loans taken will be repaid, likely in a timely manner. Lower scores suggest that a person is a credit risk who cannot repay a loan.
An algorithm developed by the Fair Isaac Corporation, known as FICO, is used to calculate beacon scores. The algorithm considers the consumer’s history, total credit utilization and other factors to generate a numerical score. Credit scores do not reflect ability to repay so much as they indicate whether or not a consumer is likely to repay a loan. Some people are fully capable of obtaining a loan in terms of meeting income requirements, but have low credit scores, which suggests they may be unwilling to repay the loan, making them a credit risk.
The beacon score is used internally. It is available to creditors, including businesses from which a person may apply for loans and other forms of financial assistance. People do not have the right to see your scores, although they can access the estimated scores. Many banks and other financial institutions offer credit score monitoring on your accounts and this may include estimates of current credit scores along with tips for improving them.
A beacon score can fall between 300 and 850. Anyone with a score above 750 is said to have very good credit and is an excellent candidate for a loan. Scores between 700 and 750 are good, while scores between 650 and 700 are “average.” Lower scores may indicate that someone is not creditworthy. People with these scores may not be eligible for certain types of credit and may pay high interest on the credit they can access.
Although different credit bureaus use the same credit scoring model, it is still possible for scores to vary. Sometimes the information in the file is variable. Therefore, a beacon score may be higher or lower than scores provided by other agencies. It is a good idea to review credit reports from all credit bureaus periodically to check for disparities between reports, especially looking for signs of financial activity that may be fraudulent.
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