What is a good Beacon score?

Credit scores are the numerical means that a credit-reporting agency uses to determine the credit worthiness of a particular person. There are various terms used to refer to a credit score, including a Beacon score. Many people don’t ever know their score until they apply for credit, and even then, they don’t know what it means. They often wonder, What is a good Beacon score?

Credit scores in general let a lender know how likely a person is to repay their debts. Computer programs, called algorithms, are used to analyze a person’s debt load, available credit, credit repayment history and bill payment history. By comparing, compiling and interpreting this information, the computer program comes up with a number that gives the lender a general idea of how good of a risk the potential customer is. The higher the credit score, the better chance that they’ll repay the debt.

This score is also used to help a lender determine what interest rate to give a particular client. The higher the Beacon score, the lower the interest rate. A credit score is an objective measure, so it does not consider race, ethnicity, age, or gender. For this reason, many people believe it to be a very objective measure and it is the favored means of determining lending.

The largest and most used model of determining a credit score is developed and maintained by the Fair Isaac Corporation, or FICO. Many times the credit score is known generally as a FICO score, even though it may actually be one of the derivative scores, such as the Beacon score, that is based on the FICO measure.

So what is a good Beacon score? It is a high score as calculated by the Equifax credit reporting agency, one of the three large credit agencies in the United States. Equifax uses Beacon, Beacon 6.0, Beacon 96 and Pinnacle credit scores, calculated with its own formula and statistical methods. Still, it is based on the Fair Isaac model.

The average Beacon score is about 678, meaning half have below that score and half above that score. This score would not garner the best interest rates or loan terms. A score above 750 would produce the top terms on loans, provided all other items in a person’s file are positive (ie: the person is employed and has a good income history).

Many lenders take an average of two or three scores before making a lending decision.