Beacon Score - Explained
What is a Beacon Score?
Written by J. Mance Gordon
Updated at April 18th, 2022
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What is a Beacon Score?
The Beacon score refers to a credit score that indicates the creditworthiness of individuals to borrowers. The Equifax Credit Bureau generates the Beacon scores which vary from person to person depending on the credit report of individuals. The scores are generated through a complex algorithm after a series of data is computed. The Beacon score uses a 3-digit credit score to represent an individuals creditworthiness. This credit score helps lenders to determine how much loan to offer a borrower and whether such borrower has the potential to pay back the loan without defaulting.
Back to:BANKING, LENDING, & CREDIT INDUSTRY
How Does a Beacon Score Work?
There are three major credit bureaus in the United States, each of these bureaus develop their credit score using the same algorithm, and they assign different names to the credit score generated. The Beacon score is used by Equifax Credit Bureau, other bureaus are Transunion and Experian. The credit score generated by these agencies is a three-digit score which range from 150-934 to depict the creditworthiness of an individual. Borrowers with high creditworthiness have higher credit scores while those with low or poor creditworthiness have the lowest scores. Generally, there are various credit scores generated by different rating agencies, the score is often the same for one individual given that all these agencies use the same mathematical algorithm and credit information. A typical lender will consider the creditworthiness of a borrower before issuing a loan. Lenders often depend on credit scores given by these agencies to have an insight into the credit history and report of individuals. All the three credit agencies have different methodologies they use in arriving at credit scores, this means there can be a variation of a credit score depending on the credit agency.
Equifax
The Equifax Credit Bureau is one of the three credit agencies in the United States, this agency uses Beacon and Pinnacle credit scores for credit reporting. Both credit scores use different methodologies to depict the creditworthiness of individuals. For instance, you can have Pinnacle 1, Pinnacle 2, Beacon 5.0 Bank Card, Beacon 09 Ban Card, and many others. Oftentimes, credit scores vary depending on the credit a borrower wants to take. Lenders who use the credit scores generated by Equifax have access to methods of calculating the credit scores and their variations.