The Beacon / FICO scoring system predicts the likelihood that an existing account or potential customer will become a serious credit risk. Beacon / FICO  scores were developed by Fair, Isaac and is a score that is based on the data available in the borrower's credit report. It is important to note that it is not a measure of a borrower's income, assets, or bank account - it is based solely on the data within the credit file.

The score is based on ALL the credit related data in the credit report - not just negative data. The type of information looked at when compiling a score includes but is not limited to:

Payment History

Public record and collection items Severity, recentness and frequency of delinquencies noted in trade line section

Outstanding debt

Number of balances recently reported Average balance across all trades Relationship between total balances and total credit limits on revolving trade lines

Credit History

Age of oldest trade line

Inquiries and new account openings

Number of inquiries and new account openings in the last year Amount of time since most recent inquiry

Types of credit in use

Number of trade lines reported for each type:

Bankcard
Travel and Entertainment cards
Department store cards
Personal Finance company references
Other

Average credit score

Scores range from 400 to 850
The average American has a score of 720  
First rate banks want a score of at least 640
Second chance banks want a score of 540 or higher

Designed to identify creditworthy consumers and assess an individual's overall credit risk, BEACON predicts the likelihood that a new or existing account will become delinquent within 24 months after scoring. Developed with Fair, Isaac, and based on a sample of over one million Equifax consumer credit profiles, BEACON identifies and projects the full range of credit risks-including bankruptcies, charge-offs, repossessions, loan defaults and delinquencies.

Using proven statistical procedures that identify the most significant subset of characteristics distinguishing between future good and bad credit performers, BEACON delivers a score ranging from 363 to 830 (high scores indicate lower risk levels). With multiple targeted scorecards that accurately score both new and established credit files, BEACON enhances the decision-making processes associated with approving new accounts, setting credit limits, reissuing cards, formulating debt-recovery strategies and capitalizing on cross-selling opportunities.

Features of Beacon Credit Score:

• Delivers precise and consistent credit scoring without requiring complex data analysis on your end
  
  
• Draws from a comprehensive, nationwide database of 190 million consumer credit files for complete payment history
  
  
• Updated regularly to reflect changes in consumer credit behavior
  
  
• Returns up to four reason statements defining the elements most impacting the individual's score that also can be used as explanations for applicants or customers not meeting your criteria
  
  
• Offers four industry-specific models (Auto Finance, Bankcard, Installment and Personal Finance) to maximize risk prediction for those segments
  
  
• Ten scorecards support an evaluation of a wide variety of credit profiles, with two additional scorecards for each industry option
  
  
• Odds charts by industry, application and performance assist customers in adjusting score cut-offs
  
  
• Provides excellent risk scoring solution when volume or resources preclude the development of a custom scorecard