Credit Scores and Their Importance

Beacon Scores, FICO Scores, Credit Scores, Empirica Scores are Credit scoring systems used by the 3 Credit Bureaus. Equifax calls it a Beacon score, Experian calls it an Experian/Fair, Isaac Risk Score, and TransUnion calls it an Empirica score. Many people in the lending business just call them FICO (rhymes with “psycho”) scores.

– Empirica credit score is a TransUnion credit bureau score.
– Beacon Score credit score is an Equifax credit bureau score.
– Fair Isaac/FICO Score is an Experian (formerly TRW) credit bureau score.

Do you need all 3 scores?

The short story is yes you do! In today’s business market, looking at all three of your FICO scores and credit reports is something you must do! Why? You may ask.

Each of your credit reports may be different

Credit bureaus don’t share their data with each other. Each of the three national bureaus may have different data on you – and you won’t know it until you check.

Each of your FICO credit scores may be different

If your credit reports each contain different information, you may have three different FICO scores. These are the important scores that lenders use to judge you and your risk as a borrower.

Lenders may look at all three of your FICO scores

Lenders, especially mortgage lenders, may look at all three of your FICO scores to determine whether to give you a loan or grant credit – for everything from a car loan to a home loan to a credit card to a cell phone. Don’t want any last minute surprises.

You need to protect against ID Theft

Your first sign of a stolen identify may come from the information in each of your credit reports, including lines of credit that you did not open and home addresses that are not yours. You need to regularly look at all three credit reports and FICO scores to rest assured that your credit and your identity are safe.

Top 5 Killers of Beacon scores are:
1. Bankruptcies
2. Judgments
3. Collections
4. Past 30 days late payments
5. For those with no late payments: over 80% borrowed against your High Credit Limit.

Credit scores are different than Beacon scores in that each Bureau may record different data from different creditors. The scores, however, equate to the same thing and are similar in nature. Scoring is not dependent on a borrower’s income, assets or bank account status – it is based solely on data stored on the credit file. Some banks don’t even report scoring unless you score badly.

Beacon, FICO, and Empirica credit scores and credit rating scores are based on all credit related data in your credit report – not just bad credit. Compiling a beacon credit score, therefore, includes, but is not limited to:

What is the average Beacon Fico credit score or national average fico beacon credit score?

The average American with no late payments has a Beacon Fico score of 720. Credit scores range from 350 to 850. The number or individuals at either end of this range are few.

Low interest rate banks want a Beacon Fico score of at least 640.

Middle to high interest banks want a Beacon Fico score of 540 or higher.

Remember, too, there are other values that count in getting loans, like length of time in your job and income. You will need at least $1850 per month to qualify for most card loans even if your score matches the values above. If you have 2 repossessions or an active Chapter 13, you will be disqualified. Most lenders also require at least 3 rated credit files. For example, you may have a high beacon score but have borrowed only twice in your life. If you have a debt to income ratio of over 45%, you will be disqualified. This means your monthly bills total 45% of your monthly GROSS income.

Credit Rebuild Plan

1. Get your credit report somewhere quick. Get it Free or get all 3 Bureau Credit Reports “with free score” or with choice for score upgrade.
2. After checking your credit report, look for old or unfamiliar files and dispute these. In the end you will get phone numbers or addresses where you can negotiate and pay. Not all bad credit can be removed or rebuilt, but it doesn’t hurt to try.
3. Pay bills on time and if you can’t, make arrangements to pay as quickly as possible and call them before they call you. Humbly ask for leniency.
4. Overlap past bad credit with present good credit. You could send $200 and ask to open an account so you can establish credit, and then charge your gas. Pay some extra each month.
5. Make sure none of your balances are more than 80% against your high credit limit. Over 80% on balances will kill a solid credit score.
6. Wait 7 years. After which most black marks on your credit score are erased.
7. Not all bad credit can be removed or Rebuilt legally
8. Don’t try to get a new credit identity… it’s illegal!

As you can guess, credit is important. Getting it, protecting it, and maintaining it. So the next time you see those shoes that you have just got to have ask yourself are they worth the trouble.