Beacon® score is the name Equifax gives to the FICO® score it calculates using the credit scoring models developed by Fair Isaac Corporation.

First announced in March 2006, Vantage Score® is the latest addition in consumer credit scoring models. Its methodologies and algorithms were cooperatively developed by Equifax, Experian, and TransUnion, the three major consumer reporting agencies. While the formula for calculating this particular score is different, a Vantage Score® effectively serves the same purpose as a FICO® score: to measure consumer creditworthiness. Vantage Scores range from 501 - 900. See the official website for more information.

A FICO® score is a credit score produced from models developed by Fair Isaac Corporation. The score is used to measure a consumer's creditworthiness and risk, and is in use worldwide. You have three FICO® scores, one from each credit bureau, because they each have their own proprietary methods for collecting and assessing the information. Equifax calls it your Beacon® score; Experian calls it your Experian/Fair Isaac Risk Model score; and TransUnion calls it your Empirica® score. FICO® scores range from 300 - 850 and are available through all three consumer reporting agencies.

Having too many credit cards with either high balances or large amounts of credit available can negatively impact risk scores depending on the overall credit history.

If you hold a joint credit account, have co-signed a loan or have authorized use of another person's credit, these items could affect a score if they appear on your credit report. It's important that joint account holders or authorized users understand that their credit behavior does affect the other joint account holder or main account holder. A credit account held solely in the name of your spouse, child or any other family member cannot impact your credit score. However, in community property states, all debt acquired during a marriage is considered a joint debt, regardless if the account is joint or in the name of an individual spouse.

Absolutely. By cosigning, you are accepting full responsibility for the debt if the other person does not pay as agreed. A cosigned account will appear on both your credit history and the other person's. All loans and credit card accounts that appear on your credit report will impact credit scores.

No, only applications for credit initiated by the consumer will affect your score. Inquiries into your credit for account review purposes as well as preapproved offers of credit have no effect on credit scores.

Paying bills on time is generally the single most important contributor to a good credit score. Being late on any bill, for any length of time, is a possible indication of future non-payment of debt and is almost always viewed negatively by lenders. Any late payments will remain on your credit report for up to seven years.

Unpaid medical bills can cause surprising and serious damage to your credit report.

It's often a plain and simple case of miscommunication. Your insurance company and your medical provider are in negotiations over paying a recent hospital bill. You think it has been paid, or at least should have been, because you have insurance. The bill is delinquent and then overdue and then sent to collections. All of the sudden you are stuck with a collections record on your credit report for 7 years. Not your fault?…Think again.

Medical collections are becoming increasingly common in this era of red-tape insurance companies and giant health care corporations. If you are injured and your insurance company doesn't pay, you can often be legally stuck with responsibility for the bill. That collections account can stay on your credit report for up to seven years if you don't prove that it was a factual error. How can you be sure your credit doesn't end up with a scar? Follow these tips for keeping your credit out of harm's way:

Prevention

• Emergency reserve -It's important to have enough money saved to cover your living expenses for a few months in case you lose your job or unexpectedly land in the hospital. Medical bills can sometimes add up to unbelievable amounts, so you may want to also keep a credit card with a high limit reserved for emergency use.
• Be flexible -Flexible Spending Accounts or "Cafeteria Plans" offered through your employer provide an easy pre-tax way to pay for medical expenses. Ask your employer about what plan may be included in your benefits. With this system, you decide how much of your salary to set aside when you sign up for the year. For example, if you choose to pull out $100 a month for the plan, you have $1,200 you can use for medical bill reimbursements that year.
• Power of attorney -If things get really sticky, having a trusted spouse or family member with legal power of attorney can help. When you are sick in the hospital, you may not be able to wrestle with the insurance companies and billing offices on your own. Talk to a financial planner or lawyer to have these papers drawn up. Be sure that this person understands the responsibilities and has a copy of your medical insurance policy.

Prescription

• Get the facts -If you receive a bill you thought was covered, go through your insurance policy with a fine tooth comb to see what you are really responsible for paying. These documents can also outline the best procedures for cutting through the red tape in the billing office. You'll also want to contact the insurance company and the medical office for more information as soon as you suspect something is wrong with your bill.
• Settle your bills -Even if your insurance company is at fault, you will probably be better off paying the medical bill yourself before it's sent to collections rather than continuing to deny the charge. Paying the bill doesn't mean you have to stop negotiating with your insurance company over the amount, it just means that you won't also have to negotiate over a collection account on your credit report.
• Righting the wrongs -If the account was sent to collections, avoid "settling" the bill and try to pay off the amount in full. A fully paid collections account is slightly better for your credit than an unpaid or settled account. If your medical bill was sent to collections in error, you still have options. You can dispute the record on your credit report if you can prove that the bill was sent to collections unlawfully (for example - if you were never billed directly for the amount before it was sent to collections)

HINT:

MANY hospitals write off the difference for charitable purposes, find out how your can be part of that charity.

Fiction

My score determines whether or not I get credit.

Fact

Lenders use a number of facts to make credit decisions, including your FICO score. Lenders look at information such as the amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is low, or decline your request for credit although your score is high.

Fiction

A poor score will haunt me forever.

Fact

Just the opposite is true. A score is a "snapshot" of your risk at a particular point in time. It changes as new information is added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more favorable interest rates. HOWEVER, any derogatory information will stay on your credit file for 7 years and Bankruptcy's will stay on your file for 10 years.

Fiction

Credit scoring is unfair to minorities.

Fact

Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit. Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history. Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.

Fiction

Credit scoring infringes on my privacy.

Fact

Credit scoring evaluates the same information lenders already look at - the credit bureau report, credit application and/or your bank file. A score is simply a numeric summary of that information. Lenders using scoring sometimes ask for less information - fewer questions on the application form, for example.

Fiction

My score will drop if I apply for new credit.

Fact

If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for your credit report information (called "inquiries") will appear on your report. Looking for new credit can equate with higher risk, but most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on the credit score.

Self improvement is a great thing. Becoming a better public speaker can earn you a promotion. Going to the gym regularly can help you lose a few pounds. Best of all, improving your credit scores can save you hundreds or even thousands on life's big purchases. Improving your credit is not hard, it just takes time and little knowledge about the credit scoring system.

While each person's individual credit profile can be improved in its own way, there are five basic things that everyone can do to give their credit scores a boost:

1. Be punctual – Pay all your bills on time each month. Late payments, collections, and bankruptcies have the greatest negative effect on your credit scores.

2. Check your credit reports regularly and take the necessary steps to remove inaccuracies – Don't let your credit health suffer due to inaccurate information. If you find an inaccuracy on your credit report contact the creditor associated with the account or the credit reporting agencies to correct it immediately.

3. Manage your debts – Keep your credit card account balances below 35% of your available credit limits. For instance, if you have a credit card with a $1,000 limit, you should try to keep the balance owed below $350.

4. Give yourself time – Time is one of the most significant factors that can improve your credit score. Establish a long history of paying your bills on time and using credit responsibly. You may also want to keep the oldest account on your credit report open in order to lengthen your period of active credit use.

5. Avoid excessive inquiries – A large number of inquiries occurred over a short period of time may be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties or overextending yourself by taking on more debt than you can easily repay. Apply for new credit in moderation.

Your score ranges from 300 to 850, but the majority of scores fall within the 600s and 700s. Higher scores indicate a lower credit risk. For a score to be calculated, your credit report must contain at least one account that has been open for six months or more, and at least one account that has been updated in the past six months.

As your data changes at the credit reporting company, so will any new score based on your credit report. So your FICO® score from a month ago is probably not the same score a lender would get from the credit reporting company today

Keeping your credit reports healthy will improve your credit scores and help get you the best rates on major purchases. We recommend that you check your credit reports every 6-12 months or at least 3 months before a major purchase in order to guard against damaging inaccuracies and identity theft.

Routine check-ups along with paying your bills on time, keeping your credit card balances below 35% of their limits and correcting any negative inaccuracies will help you maintain a healthy credit profile.

Your credit report is divided into six main sections:

Consumer information (address, birthday and employment)
Consumer statement
Account histories
Public records,
Inquiries
Creditor contacts
When you open a new account, miss a payment or move, these sections are updated with new information. Old negative records will stay on your credit report for 7-10 years.

Positive records can remain on your credit report longer. Not all creditors report to all three agencies and the agencies obtain their data independently so your reports from Trans-Union, Equifax and Experian could be substantially different from each other.

That's why it's important to check your three credit reports every 6-12 months to ensure that the information is accurate and up-to-date.

HOWEVER… we suggest you subscribe to a credit monitoring service. Contact us for our favorites.

Contact a representative today to sign up!

Trans-Union, Equifax and Experian (formerly TRW) are the three national credit reporting agencies that keep records on consumers. The reporting agencies work with lenders, creditors, insurers and employers to update and distribute your information to the appropriate institutions. Here's an example of how the system works:
1. When you apply for a new credit card the creditor requests a copy of your financial history from the reporting agencies. This causes a "hard inquiry" to be recorded on your credit report.
2. The creditor uses your credit reports and scores along with income and debt information to determine what rates to offer.
3. You start to use the new credit card and the creditor reports your activities to the credit reporting agencies about every 30 days.
4. The credit reporting agencies update your credit report as they receive new information from creditors or lenders.
5. Your credit profile changes based on your financial activity. The next time you apply for a credit card or loan, the process repeats.

Put simply, credit is the reputation for repaying debts on time. The better your credit, the more willing companies and people will be to lend you money, issue you a credit card, rent a house or apartment to you, hire you, or provide services to you on favorable terms.
Let's take on the fundamentals of the credit reporting system. From the big three credit bureaus, Trans-Union, Equifax and Experian, to your rights under the Fair Credit Reporting Act, this article will help you navigate the credit report maze.

A credit score is a rating used by a lender to help determine whether you qualify for a particular credit card, loan, or service. Based on information in your credit file, the credit reporting company analyzes your information using a complex mathematical model to yield your credit score.

Most credit scores estimate the risk a company incurs by lending you money or providing you with a service -- specifically, the likelihood that you'll fail to make payments in the next two to three years. The higher the score, the less risk you represent. Your score is calculated by a mathematical equation that evaluates many types of information found in the credit file.