Thread: Beacon Score vs. FICO Score

What is the difference between these two scores? Are there two seperate algorithms? I've spoken to reps from two different financial loan institutions, and they've assured me that there IS a difference between your FICO socre and your Beacon score.. hmmm...

jmart

Beacon score is equifax own private scoring system. Definitely different from Fair Isaac.

Okay, I am really confused I always thought that Beacon was a Fair Issac score, Emperica was the TU version from Fair Issac, and Experian's Fair Issac, was also Fair Issac. Am I wrong?

Dani

Dani....

Yes and no. The Beacon (and the others) is Equifax's customized FICO. FICO is generic and the basis for the Beacon and other scores.

Well,
I found this is the FAQ section on myfico.com:

What do I get when I order Score Power?


You receive a package of information including your BEACON/FICO score, the Equifax Credit Profile™ on which your score was calculated, and a personalized analysis of your score.

Will ordering cause my FICO score to drop?


No. Ordering your own Equifax Credit Profile and BEACON/FICO score through this service will not change your score.

Which credit reporting agency should I select?


While all three major credit-reporting agencies offer FICO scores for making credit decisions, only the BEACON score from Equifax is available for purchase by consumers.

So, they are saying that their score is your BEACON score.

Q "What is the difference between these two scores? Are there two separate algorithms? I've spoken to reps from two different financial loan institutions, and they've assured me that there IS a difference between your FICO score and your Beacon score.. hmmm..."



FICO is short for Fair Isaac and co. This company creates credit risk models.

Fact: Most basic credit scores are what is termed a FICO score. Only scores that takes the following criteria into account are considered FICO scores. http://www.myfico.com/MyFICO/CreditC...ICOFactors.htm

Also consider that FICO scores ignore things like having a job, how much you make and your age. See http://www.myfico.com/MyFICO/CreditC...ICOIgnores.htm

Now there are many versions of FICO scores and there are several basic types.

The three major types are:
1 FICO (used with credit cards).
2 Bankruptcy (used for mortgages and auto loans).
3 Profitability (used to see if they can make money off of you). Weed out the free riders.

Now there are three major credit bureaus and they all sell credit scores to consumers and lenders:

CRA name------Consumer score name---------------------Lender score name


Equifax------------Beacon/FICO score---------------------------Beacon

Experian----------Experian credit score-------------------------Experian/Fair Isaac Risk Model score

TransUnion------Trans Union personal credit score---------Empirica score

Now a real FICO score uses a scale from 300 to 850 where 661 or 681 is very good and great respectively. When a lender pulls a FICO report they get a FICO score on this scale that has a name that varies depending on what bureau they pull from. Each CRA sells 12-15 different kinds of credit scores.

Equifax's personal credit score is the same as the one they sell to lenders.

TransUnion sells consumers a score on a scale of 150 to 934.

Equifax sells consumers a score on a scale of 340 to 820.

Now if this is not complex enough, Fair Isaac could sell a mortgage company a risk score that would fall into the bankruptcy type. This would technically not be called a FICO score even though it came from Fair Isaac. This type is used to see the odds that you will declare bankruptcy and is used in applying for a mortgage. They usually pull all three of your FICO scores first and take the middle number. Then they plug in the data you give them about income, debt ratios Etc.

To make things even more complex, some lenders such as auto dealers are using older FICO credit scores on potential borrowers in conjunction with other data to come up with a number that means something to them and nothing to the rest of the world.

With all the complexities of credit scoring don't be surpassed if the average credit rep is clue-less as to what is actually going on.

Originally posted by erik776
Q "What is the difference between these two scores? Are there two separate algorithms? I've spoken to reps from two different financial loan institutions, and they've assured me that there IS a difference between your FICO score and your Beacon score.. hmmm..."



FICO is short for Fair Isaac and co. This company creates credit risk models.

Fact: Most basic credit scores are what is termed a FICO score. Only scores that takes the following criteria into account are considered FICO scores. http://www.myfico.com/MyFICO/CreditC...ICOFactors.htm

Also consider that FICO scores ignore things like having a job, how much you make and your age. See http://www.myfico.com/MyFICO/CreditC...ICOIgnores.htm

Now there are many versions of FICO scores and there are several basic types.

The three major types are:
1 FICO (used with credit cards).
2 Bankruptcy (used for mortgages and auto loans).
3 Profitability (used to see if they can make money off of you). Weed out the free riders.

Now there are three major credit bureaus and they all sell credit scores to consumers and lenders:

CRA name------Consumer score name---------------------Lender score name


Equifax------------Beacon/FICO score---------------------------Beacon

Experian----------Experian credit score-------------------------Experian/Fair Isaac Risk Model score

TransUnion------Trans Union personal credit score---------Empirica score

Now a real FICO score uses a scale from 300 to 850 where 661 or 681 is very good and great respectively. When a lender pulls a FICO report they get a FICO score on this scale that has a name that varies depending on what bureau they pull from. Each CRA sells 12-15 different kinds of credit scores.

Equifax's personal credit score is the same as the one they sell to lenders.

TransUnion sells consumers a score on a scale of 150 to 934.

Equifax sells consumers a score on a scale of 340 to 820.

Now if this is not complex enough, Fair Isaac could sell a mortgage company a risk score that would fall into the bankruptcy type. This would technically not be called a FICO score even though it came from Fair Isaac. This type is used to see the odds that you will declare bankruptcy and is used in applying for a mortgage. They usually pull all three of your FICO scores first and take the middle number. Then they plug in the data you give them about income, debt ratios Etc.

To make things even more complex, some lenders such as auto dealers are using older FICO credit scores on potential borrowers in conjunction with other data to come up with a number that means something to them and nothing to the rest of the world.

With all the complexities of credit scoring don't be surpassed if the average credit rep is clue-less as to what is actually going on.

This is a hall of fame post. Well said.

I think the problem that we all have is that we lose sight of the importance of the underlying information and focus too much on the "score". Since we don't know what "score" any potential lender is going to see, everyone should focus on the basics that make up any score model such as:

Payment history, lates, derogs, bk etc..
Credit usage d/i ratios
Number of inquiries
Age of accounts

If you focus on these factors and worry less about your "score" you'll get the credit you want or need.

Get rid of your "baddies" don't max out your CC's and the battle is more than half won.

wolverine


Thanks man. This is what happens when a person has to much time on their hands.

Where have you seen info on a profitability score?

I know that many CC companies have their own internal scoring, but does FICO actually sell a model that calculates profitability?

That would be the greatest irony (among many) of credit scoring. You finally reach the holy grail (800s across the board) but nobody wants you because you won't make them any money.

There is very little information available on profitability scores but, it is used by credit card companies to determine which credit card customers are the most profitable. When you call up to lower your interest rate or ask for a line increase, it is this type of scoring that comes into play.

Credit card companies have two major ways to make money of off you:

One: Merchant fees: The more money you move through a account, the more money they make from the merchants.

Two: Fees. If you carry a big balance, pay late twice a year, and occasionally go over your limit, they make a lot of money of you from fees.

I am not encouraging anyone to throw money away to get a higher profitability score. I am just saying this is some of what they look at. They also have to figure in risk and this is where your FICO score comes in. If your score is good, then they figure the odds of you defaulting are small so even if you are not terribly profitable they will tolerate you.