What's a good credit score? - Posted by Tim

Posted by Bruce Lawson on March 04, 2001 at 12:40:09:

The Beacon score is used by the Fair Issac Co. and this is what most lenders use to determine your credit worthiness,Equifax teams up with Fair Issac. Experian and TransUnion use a different company to determine your financial calculation(it’s a mystery)

What’s a good credit score? - Posted by Tim

Posted by Tim on March 04, 2001 at 07:22:57:

I just received my credit score from QSpace. It’s 736. Is that good?

Re: What’s a good credit score? - Posted by Ed Garcia

Posted by Ed Garcia on March 04, 2001 at 13:40:43:


That credit score is excellent. Here is some information that I think will help you understand more on credit scores.

What is credit scoring?
Credit scoring is a system creditors use to help determine whether to give you credit.

Information about you and your credit experiences, such as your bill-paying history, the number
and type of accounts you have, late payments, collection actions, outstanding debt, and the age
of your accounts, is collected from your credit application and your credit report. Using a
statistical program, creditors compare this information to the credit performance of consumers
with similar profiles. A credit scoring system awards points for each factor that helps predict
who is most likely to repay a debt. A total number of points – a credit score – helps predict
how creditworthy you are, that is, how likely it is that you will repay a loan and make the
payments when due.

Because your credit report is an important part of many credit scoring systems, it is very
important to make sure it’s accurate before you submit a credit application. To get copies of
your report, contact the three major credit reporting agencies:

Equifax: (800) 685-1111
Experian (formerly TRW): (888) EXPERIAN (397-3742)
Trans Union: (800) 916-8800

These agencies may charge you up to $8.50 for your credit report.

Why is credit scoring used?
Credit scoring is based on real data and statistics, so it usually is more reliable than subjective or
judgmental methods. It treats all applicants objectively. Judgmental methods typically rely on
criteria that are not systematically tested and can vary when applied by different individuals.

How is a credit scoring model developed?
To develop a model, a creditor selects a random sample of its customers, or a sample of similar
customers if their sample is not large enough, and analyzes it statistically to identify characteristics
that relate to creditworthiness. Then, each of these factors is assigned a weight based on how
strong a predictor it is of who would be a good credit risk. Each creditor may use its own credit
scoring model, different scoring models for different types of credit, or a generic model
developed by a credit scoring company.

Under the Equal Credit Opportunity Act, a credit scoring system may not use certain
characteristics like – race, sex, marital status, national origin, or religion – as factors. However,
creditors are allowed to use age in properly designed scoring systems. But any scoring system
that includes age must give equal treatment to elderly applicants.

What can I do to improve my score?
Credit scoring models are complex and often vary among creditors and for different types of
credit. If one factor changes, your score may change – but improvement generally depends on
how that factor relates to other factors considered by the model. Only the creditor can explain
what might improve your score under the particular model used to evaluate your credit

Nevertheless, scoring models generally evaluate the following types of information in your credit

Have you paid your bills on time? Payment history typically is a significant factor. It is
likely that your score will be affected negatively if you have paid bills late, had an account
referred to collections, or declared bankruptcy, if that history is reflected on your credit
What is your outstanding debt? Many scoring models evaluate the amount of debt you
have compared to your credit limits. If the amount you owe is close to your credit limit,
that is likely to have a negative effect on your score.
How long is your credit history? Generally, models consider the length of your credit
track record. An insufficient credit history may have an effect on your score, but that can
be offset by other factors, such as timely payments and low balances.
Have you applied for new credit recently? Many scoring models consider whether you
have applied for credit recently by looking at “inquiries” on your credit report when you
apply for credit. If you have applied for too many new accounts recently, that may
negatively affect your score. However, not all inquiries are counted. Inquiries by creditors
who are monitoring your account or looking at credit reports to make "prescreened"
credit offers are not counted.
How many and what types of credit accounts do you have? Although it is generally
good to have established credit accounts, too many credit card accounts may have a
negative effect on your score. In addition, many models consider the type of credit
accounts you have. For example, under some scoring models, loans from finance
companies may negatively affect your credit score.

Scoring models may be based on more than just information in your credit report. For example,
the model may consider information from your credit application as well: your job or occupation,
length of employment, or whether you own a home.

To improve your credit score under most models, concentrate on paying your bills on
time, paying down outstanding balances, and not taking on new debt. It’s likely to take
some time to improve your score significantly.

How reliable is the credit scoring system?
Credit scoring systems enable creditors to evaluate millions of applicants consistently and
impartially on many different characteristics. But to be statistically valid, credit scoring systems
must be based on a big enough sample. Remember that these systems generally vary from
creditor to creditor.

Although you may think such a system is arbitrary or impersonal, it can help make decisions
faster, more accurately, and more impartially than individuals when it is properly designed. And
many creditors design their systems so that in marginal cases, applicants whose scores are not
high enough to pass easily or are low enough to fail absolutely are referred to a credit manager
who decides whether the company or lender will extend credit. This may allow for discussion
and negotiation between the credit manager and the consumer.

What happens if you are denied credit or don’t get the terms you want?
If you are denied credit, the Equal Credit Opportunity Act requires that the creditor give you a
notice that tells you the specific reasons your application was rejected or the fact that you have
the right to learn the reasons if you ask within 60 days. Indefinite and vague reasons for denial
are illegal, so ask the creditor to be specific. Acceptable reasons include: “Your income was
low” or “You haven’t been employed long enough.” Unacceptable reasons include: “You didn’t
meet our minimum standards” or “You didn’t receive enough points on our credit scoring

If a creditor says you were denied credit because you are too near your credit limits on your
charge cards or you have too many credit card accounts, you may want to reapply after paying
down your balances or closing some accounts. Credit scoring systems consider updated
information and change over time.

Sometimes you can be denied credit because of information from a credit report. If so, the Fair
Credit Reporting Act requires the creditor to give you the name, address and phone number of
the credit reporting agency that supplied the information. You should contact that agency to find
out what your report said. This information is free if you request it within 60 days of being turned
down for credit. The credit reporting agency can tell you what’s in your report, but only the
creditor can tell you why your application was denied.

If you’ve been denied credit, or didn’t get the rate or credit terms you want, ask the creditor if a
credit scoring system was used. If so, ask what characteristics or factors were used in that
system, and the best ways to improve your application. If you get credit, ask the creditor
whether you are getting the best rate and terms available and, if not, why. If you are not offered
the best rate available because of inaccuracies in your credit report, be sure to dispute the
inaccurate information in your credit report.

Where can you get more information?

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices
in the marketplace and to provide information to help consumers spot, stop and avoid them. To
file a complaint, or to get free information on any of 150 consumer topics, call toll-free,
1-877-FTC-HELP (1-877-382-4357), or use the online complaint form. The FTC enters
Internet, telemarketing, and other fraud-related complaints into Consumer Sentinel, a secure,
online database available to hundreds of civil and criminal law enforcement agencies worldwid

Beacon Vs. FICO - Posted by Mark in GA

Posted by Mark in GA on March 04, 2001 at 09:56:12:

What is a Beacon score and what is a FICO score? What is the relationship between these numbers and the 3 major credit reporting companies?

Thanks in advance


Re: What’s a good credit score? - Posted by Cathy Palmer

Posted by Cathy Palmer on October 05, 2001 at 12:49:43:

Is there a range of low end bad rating to high end excellent rating. I’ve seen 500 to 700 scores but without know the possible range, its hard to judge.
this was a beacon score. thanks.