Whether you are looking for a new bank account, applying for a new job, looking for a new car or buying a house, chances are you have been through a credit check. Different companies look at different parts of your credit history to determine your ability to pay. Knowing the process including the difference between a Beacon and FICO Score, will help you understand your credit worthiness,
In today's society your credit score is very important. Without a very good or good credit score you are unable to rent an apartment, get a good interest loan rate on a new car or buy a home. This score means everything.
If you have a less than perfect credit rating you are stuck with higher interest rates if you are able to get a loan at all. Many times you are unable to afford many of the same standards of living people with good credit ratings live with.
The three major credit bureaus or credit agencies are Trans Union, Equifax and Experian. There is a fourth credit bureau that is in the development stage called Innovis. Each credit union is named after the score that they use to determine creditworthiness. Experian uses FICO, Trans Union uses Empirica and Equifax utilizes Beacon.
Equifax Credit Bureau
The Beacon scoring system is based on a sophisticated mathematical algorithm. The score is indicative of a person's ability to pay back loans. The score criteria includes late payments, debts, open accounts and the kind of credit a person has, and any recently applied-for credit.
Experian uses the FICO score because it was created by the Fair Isaac Corporation. A person's FICO score is based upon five different criteria. These are payment history, amount owed, how long of a credit history, any new credit and the kind of credit used. Criteria are listed from greatest to least impact on your score.
TransUnion Credit Bureau uses a similar scoring system called Empirica. It includes many of the same criteria as the other two, most important being payment history and amount owed.