What Is a Bad Beacon Credit Score?

As of 2010, none of the three major credit reporting companies sells the FICO score used by most lenders, but they do provide credit scores based on the FICO model. Experian, for instance, sells the Beacon score. The Beacon score has the same numerical range as the FICO model, and it weighs the variables in its credit score formula much the same way the FICO formula does. Thus, a bad Beacon score means you probably have a poor rating at the other credit rating companies.

Identification

The FICO and Beacon scores range from 300 to 850, for a 550-point spread. The average score in the U.S. was a 692 in January of 2011, according to Experian. Having a score below 692 does not mean you have a bad score. Lenders decide whether to approve someone for a loan and what interest rates to charge based on several factors, although credit score is one of the most important factors. Usually, anyone with a score below 620 is considered a bad credit risk, according to several reports provided by the Credit Scoring website.

Interest Rates

A poor Beacon score likely disqualifies you for most loans. You may have to go to a sub-prime lender, which compensates for your added credit risk by offering its worst interest rate available. In 2008, for instance, the difference in interest rates between the best and worst scores was about 4.3 percent. On a 30-year, $100,000 mortgage, this adds up to an extra $110,325 over the life of the loan, or $307 per month.

Other Effects

A poor Beacon score negatively impacts areas of your life other than your financial activity. Landlords may deny you a residence because you are more likely to break your lease than someone with good credit. Insurers could deny you coverage or raise your premiums, because people with poor credit tend to make the most claims. You could fail to land a job if the employer believes your credit report shows a low amount of integrity and financial duress than could compromise the position.

Tip

Equifax, Experian and TransUnion -- the three main credit reporting bureaus -- provide each consumer with a free credit report each year through AnnualCreditreport.com. You should note any erroneous negative items on your report and attempt to remedy the situation by filing a dispute. If you have missed payments, make it a priority to pay on time. Also, shop around. A Beacon score that's unacceptable for one lender could be acceptable for another.