Your credit score and underlying history is one of your most vital parts of your financial life. Your credit score follows you forever and it will play a huge role in many major financial situations throughout your life. Many people think that a credit score only really matters when it comes to being approved for a loan or credit card, but it goes far beyond that. An increasingly common and somewhat controversial practice is taking place as employers check the credit of prospective new employees. The argument for doing this is that employers believe they can use credit history to determine responsibility.
Your BEACON score is calculated based on the information contained in your Equifax credit history. While knowing your actual score is a good start, understanding the key factors affecting your BEACON score is much more important. These factors will provide you direction on how you can increase or maintain your BEACON score over time. Your BEACON score is crucial in how the lenders see you.
An initial way for improving your score is to make sure your credit report has no errors. Even small errors can fundamentally hurt your score. If you presume that your low score has been caused by the inaccuracy, and then you must contact the credit reporting agencies and request them regarding the correct the errors in your report. There are different types of inquiries that reside on your credit bureau report.
The score only considers those inquiries that were posted as a result of you applying for credit. Other types of inquiries, such as account review inquiries (where a lender with whom you have an account has received your credit report) or consumer disclosure inquiries (where you have requested a copy of your own report) are not considered by the score. The scores can identify "rate shopping" so that one credit search leading to multiple inquiries being reported is usually only counted as a single inquiry. For most consumers, the presence of a few inquiries on your credit file has a limited impact on BEACON scores.
A common misperception is that every single inquiry will drop your score a certain number of points. This is not true. The impact of inquiries on your score will vary - depending on your overall credit profile. Inquiries will usually have a larger impact on the score for consumers with limited credit history and on consumers with previous late payments. The most prudent action to raise your score over time is to apply for credit only when you need it.
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