What Is a Beacon (Pinnacle) Score?
The Beacon Score, which has since transitioned to the Pinnacle Score, is a credit score generated by the Equifax Credit Bureau to provide lenders with insight on an individual's creditworthiness. Beacon Scores are credit scores, which are determined through a complex algorithm. These numbers give the lender insight on a borrower’s credit history and potential ability to be able to repay the debt for which they are applying.
While the exact calculation of the Beacon/Pinnacle score is an Equifax company secret, as with other credit bureaus payment history and delinquent accounts count most, while also considering length of credit history, types of accounts used, and credit searches.
- The Beacon score (or Pinnacle score) is a credit scoring method developed by Equifax.
- The exact algorithm is a closely guarded secret, but factors like credit history, delinquent payments, and number of open credit lines will play a role in your score.
- A higher credit score tells lenders or other entities that you are a favorable credit risk, while a low score may bar you from accessing credit or require higher interest rates.
Beacon Scores Explained
A Beacon/Pinnacle Score is a credit scoring method used by Equifax to arrive at a credit score provided for a lender when doing a hard inquiry.
Each of the three major credit bureaus – Equifax, Transunion, and Experian – have varying methodologies for determining a credit score. Scores can range from 150 to 934 with higher scores given to higher credit quality borrowers. Most lenders will consider a borrower to have good credit with a score of 700 or higher. Lenders use bands of acceptance that provide qualification for borrowers by their credit score level. For example, many mainstream lenders will deny credit to borrowers with a credit score of less than 700. Lenders may also take into consideration other details on a borrower’s credit report as well but the credit score is typically the primary factor.
Each credit bureau uses its own algorithms and has varying options that a lender can request when doing a hard credit inquiry to make a credit decision. Credit score factors involved with nearly all credit scoring methodologies include the following: late payments, current debts, length of time an account has been open, types of credit and new applications for credit. Lenders can request different variations of a credit score based on the type of credit the borrower is applying for and their relationship with credit reporting agencies. Some lenders may partner primarily with a single credit bureau while others compare credit scores from the three leading providers.
The type of credit scoring analysis that a lender does when evaluating a credit application is part of their customized underwriting process. The service agreements between lenders and credit reporting agencies will govern the terms of the partnership and assign costs for hard credit inquiry reports and other services.
Equifax uses both Beacon and Pinnacle credit scores. Within these two categories, they have a range of methodologies including: Beacon 5.0 Base, Beacon 5.0 Auto, Beacon 5.0 Bank Card, Beacon 09 Base, Beacon 09 Auto, Beacon 09 Bank Card, Beacon 09 Mortgage, Pinnacle 1 and Pinnacle 2.
When partnering with Equifax for credit score reporting, lenders receive full disclosure on how each credit score is calculated and the differences between variations. Lenders can then choose to request a specific type of credit score from Equifax based on the type of credit they are considering for a borrower.