Beacon Score
Candlefocus EditorCredit history: A consumer’s credit history is an important factor in the calculation of their Beacon Score. It includes information on any credit accounts a consumer has had, as well as whether payments have been made on time, or late, and whether accounts have been closed. Longer credit histories tend to be rewarded with higher scores.
Delinquent payments: If a consumer has unpaid debt or loan payments, it will have a negative influence on their Beacon Score. If the payments are more than 30 days overdue, this can have a significant impact on their score. Paying off any unpaid debt and making payments on time as agreed in the future will help to boost a consumer’s credit score.
Number of open credit lines: Having too many open credit lines can be a red flag to creditors and will affect the credit score. A consumer should strive to keep only the amount of open credit accounts that they need and be selective when choosing which accounts to open or close.
Credit utilization ratio: This is calculated by dividing the amount of available credit being used by the total amount of available credit. According to financial experts, it is best to keep this ratio below 30%. So, if a person has a credit card with a $1,000 limit, they should aim to keep their balance under the $300 mark.
By understanding the various factors that make up the Beacon Score, consumers can do their best to earn a favorable credit score. Paying delinquent accounts, keeping credit utilization low, limiting inquiries on a credit report, and making sure payments are made on time will all help to improve a Beacon Score. Along with a person's financial behavior and consistency, these steps can help them achieve a score which lenders will view favorably in the future.