What a Beacon Score Means
Beacon credits scores are a different version of the FICO scores, however formulated by the same theory. These credit scores are used by the various credit reporting agencies to evaluate the potential of a borrower or debtor for repaying loans and mortgages. These scores are checked every time a consumer applies for a home loan or mortgage. Beacon credit scores are used by Equifax bureau and are also referred to as the Pinnacle Score.
All of the credit reporting bureaus use a different version of the FICO scores which all function on the same general risk assessment procedure. The beacon scores are simply computed through the data found on a credit report of a consumer, with the data being inverted with mathematical supplants to combine for a final number. The credit reports include various details about the payment history of debtors including their jobs, income, change of address, inquiries, payments made and total debts owed. The credit score is computed through software on the basis of all this data used together.
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Assessment of the Beacon Scores
Beacon scores range from 300 to 850, just like the FICO score system. On the basis of these scores the financial potential of the debtors to repay loans are evaluated. These lenders include banks, financial institutions, individual lenders, credit card issuers, etc. The score determines the amount of interest which would be charged on the loan and also the total amount of loan which would be provided to debtors. Usually with scores below 600, credit will become difficult to get without paying excessive interest rates. Less than 500 is considered to be poor credit and can make getting a loan near impossible. Scores from 600 to 690 are considered to be average credit scores, on the good side of the aisle. Scores above 700 and up to 850 are good credit scores and those scores above 800 are excellent credit scores. The rating on the basis of these scores helps the borrowers to get loans and mortgages. Most consumers fall into the middle to high end, from about 600-700.
How to Obtain the Beacon Score?
The beacon score can be obtained through Equifax, which is the crediting bureau using the beacon score system. Credit scores can be ordered along with the credit reports or can be applied for separately. Usually the credit scores should be ordered along with the credit reports because it is easier to check them and identify the errors at the same time with a report on-hand. Unlike the credit reports, the beacon credit scores are usually paid for except in special cases such as resolving disputed errors. The law does not mandate that a beacon score be provided free of charge, so if you are looking for yours, be prepared pay for it. Most people will pay between $10 and $15 to secure the score for themselves. These scores can also be obtained through 3rd-party sites, sometimes at cost benefiting savings.
Loans Provided on the Basis of Beacon Scores
The loans provided by the lenders are evaluated on the basis of the beacon credit scores. If you have poor credit scores then the amount of interest for the loan you want would be very high. There are also chances of only being given secured loans. In these cases, lenders are happy to loan money to you, but with a catch. They want your personal property backed up and signed over as collateral to them.
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If you cannot fulfill the loan obligations, your property will be seized. While a sobering thought, especially if the property in question is your primary residence, it may be a good option if you have no other. In cases where you have no other means to borrow, the risk may not outweigh your need to take the loan. The upside to secured loans is that with the insurance policy your collateral property provides, the interest you will be charged is significantly lower than unsecured loans normally are. With good credit scores you can not only get lower rates of interest and the loans provided, you may not ever need to put up collateral to get a decent interest rate.