What is a FICO score or a Beacon score?

 

Let’s first begin by saying that a FICO score and a Beacon score is the same thing.  It is a score which is calculated based upon a number of factor related to an individuals credit worthiness which gives a numeric indication of one’s credit reliability.  The typical range is understood to be between 300 and 850, but this is debated.  For an interesting take on the mathematics of the beacon score check here. The basic idea that you want to have associated with the FICO or Beacon score is that it attempts to quantify the likelihood that you will make your payment on time or as agreed.  The higher your score the better you are rated. 

 

There are three different major credit agencies that report credit scores: Equifax, Experian, & Transunion.  Although they market their scores under different names, it is basically the same.  There may be a slight variation based upon the information that may be present in the credit file of one company while it may not be in the credit file of another company. 

 

Below is a chart from BankRate.com that shows the breakdown of the US population’s credit scores.  For instance, 12 percent of the population has a score between 600-649. 

 

Credit score	Percentage
499 and below	2 percent
500-549	5 percent
550-599	8 percent
600-649	12 percent
650-699	15 percent
700-749	18 percent
750-799	27 percent
800 and above	13 percent

 

It is important that you know your score if you are seeking a loan for a home because it let’s you know how the bank will view you.  The higher your score, the more desirable you will be as a client.  You can get a free credit report at a number of places online.  I personally use Experian to monitor my credit report and rate, but it is a fee service.  You can also estimate your score at BankRate.com by clicking here.  I did it myself and it came in a little lower than my actual score, but it seems rather accurate for those who are just curious. 

 

Joseph Griffin