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 Pinnacle score is an Equifax company secret, as with other credit bureaus, payment history and delinquent accounts count most, while also considering the length of credit history, types of accounts used, and credit inquiries.

Key Takeaways

  • The 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.
  • Paying off delinquent accounts, keeping your credit utilization ratio to below 30%, and limiting the number of inquiries on your report can all help improve your Pinnacle score.
  • Each bureau has their own scoring methodology based on the original FICO scoring method.

Understanding the Beacon (Pinnacle) Score

A 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 different methodologies for determining a credit score. A credit score is a numerical value—typically between 300 and 850—used to represent a borrowers riskiness.

Consumers with a higher credit score are deemed less risky by lenders, meaning they have a solid history of paying back their loans in a timely fashion. 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.

History of the Beacon (Pinnacle) Score

The very first FICO score was established in 1989 by the Fair, Isaac, and Company in an effort to standardize how credit scores are calculated. Previously, lenders would use their own methodology to create a score. This created problems because of the wide range of results; the same consumer's credit history could be described as good at one lender and bad at another.

The push for standardization helped create what are we know today as the three credit bureaus: Equifax, Experian, and Transunion. Each bureau has its own scoring methodology and the Pinnacle score is the score used by Equifax.

How to Improve Your Pinnacle Score

The first step in improving your credit score is to request your credit report from Equifax. Doing this will ensure that your Pinnacle score is not being impacted by false information such as a debt you've already paid off or don't recognize.

Once you are certain all the information on your credit report is accurate and up-to-date, the next step is to get a handle on your bills and late payments. The two most heavily weighted factors impacting your Pinnacle score are payment history and credit usage.

Credit usage refers to the amount of credit you are currently utilizing. So if you have a credit card with a $1000 limit and have already spent $700 of that limit, you have a credit utilization ratio of 70%. This is considered too high for lenders. Paying down your credit card and not letting your ratio go above 20-30% will improve your Pinnacle score.

Another way to improve your Pinnacle score is by settling delinquent accounts. If you can't afford to pay off the full amount, contact the lender or debt-collection agency responsible for your debt and ask if they will accept a lesser amount. If your lender refuses to accept anything less than the full amount, create a payment plan you can afford and that won't put you behind on other bills.

Finally, one way you can prevent your Pinnacle score from dropping even lower is by limiting the number of credit accounts you apply for. When you apply for a new loan or credit card, the lender pulls your credit report from one or all of the three credit bureaus, this is referred to as a hard inquiry. Too many hard inquiries on your account negatively impact your score, as it signals to lenders that you are in over your head, financially.

How the Beacon (Pinnacle) Score Is Calculated

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.

While the exact methodology used to create the Pinnacle score is kept secret, the 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 Scores

Depending on the type of loan a consumer is requesting, Equifax offers lenders different versions of their Pinnacle and Beacon 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.

Pinnacle Score FAQs

What Is the Difference Between Beacon (Pinnacle) and FICO?

The FICO score is the very first credit score to be created by Fair, Issac and Company in 1989 in an effort to standardize how credit scores are established. The Beacon and Pinnacle scores, on the other hand, were created by Equifax at a later date as offshoots of the original FICO scoring method.

What Is the Average Beacon Score?

While there is no public data regarding the average Beacon or Pinnacle score, the average FICO score in the U.S. in 2020 stands at 711, according to Experian.

Why Are There Three Credit Agencies?

Before the first FICO scoring method was created in 1989, lenders would use their own methodology when assessing consumers' credit, which led to huge discrepancies. The push for standardization helped create the three credit bureaus we know today—Equifax, Experian, and Transunion. This helps standardize credit scores as lenders typically use one or all three of the bureaus when pulling a borrower's report, no longer having to create their own methodology.