Beacon Score

Definition of 'Beacon Score'


A number generated by the Equifax Credit Bureau to rank an individual's credit-worthiness. Beacon scores are credit scores, which are determined through a complex algorithm. These numbers tell the lender how likely it is that the borrower will repay the loan. When NextGen FICO scores started being used, the Beacon score was replaced with the Pinnacle score.

Mathematical criteria involved in calculating a Beacon score can include late payments, current debts, length of time an account has been open, types of credit and new applications for credit.

Investopedia explains 'Beacon Score'


Beacon and other credit scores affect the interest rate on a loan. If the borrower's score is too low, the lender will charge more interest or may not lend at all.

Each bureau uses a different name for its score, even if it uses the same FICO algorithm to generate the score. For example:
- Experian uses the term "FICO or FICO II",
- TransUnion uses "Empirica"
- Equifax uses "Beacon"

For NextGen FICO scores, (created by Fair Isaac Corp.) the new names became:
- FICO advanced risk score, used by Experian
- Precision, used by TransUnion
- Pinnacle, used by Equifax



comments powered by Disqus
Hot Definitions
  1. Gross Debt Service Ratio - GDS

    A debt service measure that financial lenders use as a rule of thumb to give a preliminary assessment about whether a potential borrower is already in too much debt. Receiving a ratio of less than 30% means that the potential borrower has an acceptable level of debt.
  2. Federal Reserve Note

    The most accurate term used to describe the paper currency (dollar bills) circulated in the United States. These Federal Reserve Notes are printed by the U.S. Treasury at the instruction of the Federal Reserve member banks, who also act as the clearinghouse for local banks that need to increase or reduce their supply of cash on hand.
  3. Benchmark Bond

    A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.
  5. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  6. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
Trading Center