Beacon is a generic risk score developed by Equifax and Issac Fair that predicts the likelihood that an account will become seriously “delinquent” in the next 24 months. “Delinquent” can mean:   

 Beacon is a non-judgmental tool.

 Since Beacon is predicting the future, the most predictive variable is your recent (12-24 months) credit behavior!    

• Beacon looks to see how long it has been since the most recent 60 day (or worse) delinquency.   
• Beacon looks to see what the highest level of delinquency reached in the last year.    
• Beacon looks to see the number of months since the most recent derogatory public record.
• Charge-off: A new Charge-off bears more weight than an old charge-off.
• Paid/Unpaid Collection Items: Beacon does not care if a Collection Item is paid or unpaid. As far as Beacon is concerned, an account that has gone to Collection status is considered to be as bad as an account can get.    2. Current Level of Indebtedness:

 Beacon does not have the luxury of knowing what a consumer’s debt to income ratio is. Therefore, Beacon concentrates on the level of debt (especially Credit Card debt) that a consumer has.      

•    Beacon weighs heavily against credit card debt due to the fact that credit card debt is unsecured.To help increase your Beacon score:

 Make sure that you are never over 50% maxed out on any one credit card.3. Amount of time credit has been in use (Credit Stability): 

“File under Review”

A file with no tradeline          

No updated tradelines in the last 6 months. (Beacon is unable to predict the future if it can’t see how a consumer has paid their bills in the last year).Beacon will ignore the following tradelines:

Child support tradeline    

Family Support tradeline   

Returned check items    

Rental AgreementINVISIBLE INQUIRIES – Inquiries that do not affect the Beacon score:

 Consumers requesting a copy of their credit report from Equifax  

 (Promotional) Inquiries – Consumers receiving promotional credit card offers in the mail.

•  (Account Review) Inquiries – Credit grantors reviewing their customer’s credit file. Companies review their “loan portfolio” in order to determine if they should close the account (if Beacon has decreased) or increase the Credit Limit (if Beacon has increased).
•    EMP (Employment) Inquiries – Credit report pulled for Employment purposes.
   
• Note: Inquiry de-duping – For a 45 day period multiple auto inquiries are treated as one  and multiple mortgage inquiries are treated as one.      

Obtain a copy of your Credit Report. Address any discrepancies with all 3 Credit Bureaus.   

Pay your bills on time. Delinquent payments on mortgages, automobiles, and national credit cards can have a major negative impact on a Beacon Score.    

Pay down high outstanding balances. Keep balances low on unsecured revolving debts like credit cards. High outstanding balances can affect a score negatively.    

Do not take on new debt. Apply for and open new credit accounts only as needed.

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With a car loan, you pay for the entire cost of a vehicle, regardless of how many miles you drive it. You typically make a down payment, pay sales taxes in cash or roll them into your car loan, and pay an interest rate determined by your loan company. You make your first payment a month after you sign your contract.

With a car lease, you pay for only a portion of the vehicle’s cost, which is the part that you “use up” during the time you’re driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most states), and pay a money factor that is similar to the interest rate on a loan. With car leases, you may also pay extra fees and possibly a security deposit that you don’t pay when you buy. You make your first payment at the time you sign your contract.

Buy vs. lease example

As an example, if you lease a car that costs $25,000, that will have an estimated value of $15,000 after 24 months, you pay for the $10,000 difference (this is called depreciation), plus finance charges, plus fees. When you buy, you pay the entire $25,000, plus finance charges, plus fees. This is fundamentally why a car lease has significantly lower monthly payments than a car loan.

Car lease payments are made up of two parts: a depreciation charge and a finance charge. The depreciation part of each monthly payment compensates the leasing company for the portion of the vehicle’s value that is lost during your lease. The finance part is interest on the money the lease company has tied up in the car while you’re driving it. In effect, you are borrowing the money that the lease company used to buy the car from the dealer. You repay part of that money in monthly payments, and repay the remainder when you either buy or return the vehicle at the end of the car lease.

Car loan payments also have two parts: a principal charge and a finance charge, similar to lease payments. The principal pays off the vehicle purchase price, while the finance charge is loan interest.
However, since all vehicles depreciate in value by the same amount regardless of whether they are leased or purchased, part of the principal charge of each car loan payment can be considered as a depreciation charge, just like with a car lease – its money you never get back, even if you sell the vehicle in the future.
The remainder of each car loan principal payment goes toward equity. It’s what remains of your car’s original value at the end of the car loan after depreciation has taken its toll. Equity is resale value. It’s what you get back if you sell the vehicle. The longer you own and drive a vehicle, the less equity you have.

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