Beacon Score Factors

A Beacon score is a three-digit number used by Equifax to rate a consumer's creditworthiness. Without a Beacon score (or a credit score from one of the other major credit bureaus), mortgage lenders, auto lenders and credit card issuers may not accept your application. They need to assess your credit score to determine your likelihood of paying back the funds. Different factors determine your Beacon score, and maintaining a high rating calls for knowing how credit scoring works.

Debt Balances

The amount you owe on credit cards and loans accounts for approximately 30 percent of your Beacon score. With this said, the more you owe, the lower your credit rating. Auto loans, mortgages and student loans don't have a huge negative impact on your credit score. On the other hand, owing thousands of dollars on a credit card or having maxed out credit cards or lines of credit can reduce your Beacon score.

Payment Habits

Being responsible and paying your credit cards and loans on time can help you maintain a satisfactory Beacon score. Like your balances, your payment history has a major impact on your credit rating. Missing your payments or developing a routine of sending late payments can slowly decrease your Beacon score, prompting lenders to deny your future credit applications or charge a higher rate on loans and credit cards.

Credit Inquiries

Credit accounts are necessary to build a good credit history, and there's nothing wrong with opening new credit files. However, constantly applying for credit cards or loans can hurt your Beacon score because each credit application or inquiry takes points off your credit rating.

Length of Credit

Individuals with long credit histories tend to have a higher Beacon score than someone who recently applied for first-time credit. For this reason, closing an older account can lower your Beacon score because it shortens your credit history. Because length of credit history accounts for 15 percent of credit scores, consumers wishing to get rid of a few credit cards ought to cancel their newest card first, or keep their accounts opened and destroy the card to avoid temptation.