What Is Your Beacon Credit Score?

Definition and Examples of Beacon Scores

Beacon, sometimes stylized as BEACON, is the Equifax brand name for FICO credit scores. FICO scores, which are used by 90% of top lenders, are issued by the Fair Isaac Corporation. 

Beacon scores are based on personal financial information included in Equifax credit reports. Lenders may use different versions of the Beacon credit scoring model when deciding whether to approve you for loans or lines of credit.

For example, Fannie Mae’s mortgage underwriting process uses the Equifax Beacon 5.0 score, along with the Experian/Fair Isaac Risk Model V2SM, and the TransUnion FICO Risk Score, Classic 04. In 2009, Beacon 09 was introduced as the Equifax version of the FICO 08 credit score. 

How Beacon Scores Work

Beacon credit scores are calculated using a proprietary model Equifax doesn't disclose. But since Beacon 5.0 and Beacon 09 are based on FICO’s methodology, they use the same criteria for tabulating scores.

Here's how FICO credit scores are calculated:

• Payment history: 35% of your score
• Amounts owed: 30% of your score
• Length of credit history: 15% of your score
• New credit: 10% of your score
• Types of credit used: 10% of your score

With that in mind, the best ways to improve your Beacon score (and FICO score) include paying bills on time and maintaining low credit utilization. You can also help your score by keeping older accounts open, using a mix of credit types, and applying for new credit sparingly.

As mentioned, Beacon 5.0 is used by Fannie Mae for mortgage underwriting. Beacon 09, which is based on FICO 08, may be used in other types of lending decisions. For example, if you apply for a credit card or a car loan, the lender could check your Beacon 09 score or FICO 08 score. Again, the higher your scores, the more likely you are to be approved and get the best interest rates.

Lenders can determine which credit score model to use for approval decisions. It's possible that they may use more than one credit scoring option, as is common with mortgage lending. Keep in mind that your credit scores may differ from one credit bureau to another, depending on the information in your credit reports.

Beacon Scores vs. Other Credit Scores

Generally speaking, Beacon scores can be used to measure risk when extending credit or loans. This is true for other types of credit scores as well, including variations of FICO scores and VantageScores. But credit scores can vary in terms of how they analyze risk and which factors they take into account.

With FICO 08, for instance, the emphasis is on predicting default rates and how likely a consumer is to pay back a loan or line of credit. Equifax's Pinnacle score is a “next generation” model that uses more than 80 variables to measure and predict lending risk. Equifax also has a separate score model for gauging how likely someone is to file bankruptcy.

Then there are VantageScores, which incorporate many of the same factors as the FICO scoring model. But VantageScore 3.0 uses alternative data, such as rent and utility payments, that other scoring models don't consider. VantageScore 4.0 also includes trended data, such as your payment history over time.

The bottom line? Beacon credit scores are just one type of credit score you may have. FICO scores may be most widely used, but you can get a clearer picture of how lenders see you by comparing your scores across different models.