How to Improve a Beacon Score

Beacon Score breakdown

Your Beacon Score or FICO Score can have a major effect on your borrowing ability and interest rates offered by creditors. Unless you have an 800 or above Beacon Score, you can benefit from an improvement. It is possible to improve your Beacon Score without requiring major financial reconstruction of your budget. Beacon Score is the name used for a FICO Score by Equifax.

Instructions

1. Get your credit report and current Beacon Score. You are allowed to get a free credit report once per year at no charge, but you may have to pay a nominal amount (usually around $7.50) to get your Beacon or FICO Score. However, you need to know where your Beacon Score resides before you can take action to improve it.

2. Examine your credit report to learn if there are fixable errors. Be aware that the most common mistakes involve confusing father and mother names with those of the children. This can confuse your credit report and affect your Beacon Score. Contact the credit reporting agency to clean up your report.

3. Open one or two credit card accounts. Don't be concerned about the credit limits, as lower maximum spending limits are actually better for your Beacon Score. Opening one or two modest credit card accounts may increase your Beacon Score by 10 to 30 points rather quickly.

4. Make all payments for current debt on time. Should your timing be a bit "off," at least make your payment within the stated grace period for those accounts that charge a late fee after the grace date. In all cases, be sure your payments are posted before the next payment due date or your account will show at least one 30-day late payment, which will decrease your Beacon Score.

5. Avoid keeping a balance (on a line of credit or credit card) greater than 30 to 40 percent of your maximum spending limit. This policy will increase your Beacon Score. Should you keep your outstanding balance close to the maximum available credit, your Beacon Score will decrease. Unfortunately, there is no true "middle ground" in this area.

Tips & Warnings

• Be aware that a Beacon Score is the Equifax name for a FICO Score (Experian) and Empirica Score (Trans Union). When you check your credit, be sure to get reports from all three major reporting agencies, Equifax, Trans Union, and Experian as they sometimes have different information. Check your credit report more than once per year if you believe there might be errors.

• Don't assume your Beacon Score with Equifax will be identical to your scores with Trans Union and Experian, as there is usually a difference based on computations. Avoid having too many credit lines. Higher spending limits, even if currently unused, will decrease your Beacon Score.

References

• Credit Score Names and Definitions

Resources

• Beacon (FICO) Score Explanation