What Is a Beacon Score?
A Beacon score, developed by FICO, a leading company in credit scoring, is now known simply as a FICO score. Previously referred to as an Equifax Beacon score, it has been pivotal in the mortgage industry as FICO Score 5. FICO scores are instrumental in determining an individual’s creditworthiness.
**Key Takeaways**
– The Beacon score, now branded as a FICO score, is a credit scoring model by FICO.
– FICO scores are based on data from major credit bureaus – Equifax, Experian, and TransUnion.
– Equifax, Experian, and TransUnion also offer a FICO competitor – VantageScore.
How FICO Credit Scores Work Today
Credit scores, generated by Equifax, Experian, and TransUnion, are three-digit numbers based on individual credit habits from credit reports. The FICO score, introduced by the Fair Isaac Corporation in 1989, has evolved with models like FICO Score NG. Lenders may use older scoring models, leading to individuals having multiple credit scores.
Equifax offers various FICO scores such as FICO Score 8 and FICO Score 9, tailored for specific industries like mortgage lenders and credit card issuers. Experian and TransUnion also provide different FICO score versions.
Equifax, Experian, and TransUnion collaborated to create VantageScore as a FICO competitor. VantageScore utilizes credit report information like FICO scores but with different criteria.
How to Improve Your Credit Score
To maintain a good credit score, individuals should focus on factors like payment history, credit utilization ratio, length of credit history, credit mix, and new credit. Timely payments, low credit utilization, and maintaining older accounts positively impact credit scores.
How Can You Find Out Your Credit Score?
Obtain your credit score for free from banks, credit card issuers, or websites. Note that your credit score might differ from a lender’s if you apply for a loan.
How Can You Obtain Your Credit Reports?
By law, acquire a free copy of your credit report annually from Equifax, Experian, and TransUnion through AnnualCreditReport.com. Dispute any inaccuracies to ensure the accuracy of your credit report.
Aren’t All Three Credit Reports the Same?
Credit reports from different bureaus may vary as they get information from different creditors. These differences can impact credit scores.
What Is a Good Credit Utilization Ratio?
Maintain a credit utilization ratio below 30% for optimal credit health.
The Bottom Line
While credit scoring models may have changed, consistent credit habits are key to building and preserving a good credit score.