Your Credit Report Score: FICO Versus Beacon

It is important that you know your credit report score. This is the first step to managing it. If you know what your score is then you can find ways to manipulate it for your own benefit. An excellent score works like a charm when you are applying for credit cards, or a regular loan, or a mortgage loan. And the good thing is that it easy to get this information. Usually, you don't even have to leave your home or office, just dial a phone number or click on a website address.

In the US a federal law was passed in September 2005 which now gives you the right to get a free copy of your credit report and score each year. By being able to do this, you can find out if your inaccurate information. You can get your free credit report score easily just by asking for it. Some people refer to this score as the Beacon score because on of the larger credit reporting agencies uses a scoring algorithm by the same name.

Alternatively, other agencies use the Fair Isaac score algorithm, developed by the Fair Isaac company. Each person's score is calculated using several different factors from their credit report history, so your particular circumstances would give you a unique score. Lenders calculate the score looking at what loans and lines of credit you already have, and how you manage your monthly or other periodic payments. For example, do you pay on time, or do you often pay late, or do you miss payments. Lenders also look at what new lines of credit you took out recently as well. The credit reporting agencies which produce this credit score will look at every account you have including mortgages, car loans, insurance, as well as any credit and store cards.

It does sound scary that so many people have access to all this personal information about you. But, of course, there are certain controls on getting this information without your consent. And lenders would only have access to this information if you apply for credit or a loan, or use your charge cards.

Each component is a percentage of the total credit report score, and the main ones include your payment obligations, and the history about each of these payments. So if you keep your promise to your creditors, paying regularly to pay off all the debts you owe, then you would usually have a much higher score than other people who are delinquent with their payments.

So by knowing what your current credit score is will give you a better understanding about your ability to get more credit. You can then take this information and confidently seek a new loan to pay for the repairs to your house. Or you can decide if it is a good time to apply for more credit. Whatever your situation is you should know what your credit report score is.

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