Your Credit Score & Debt Relief

Understanding how it can affect your debt relief choice.

To begin with, you may be wondering what a Beacon or FICO rating is, and how it is used by creditors to determine your creditworthiness.

It is an industry standard for calculating a reliability factor (creditworthiness) for credit applicants. Your score is the number one criteria that most creditors use to determine what interest rate you will be charged on your mortgages, loans, and credit cards.

It is calculated based upon the information available in your credit report. Your credit report is used to determine your eligibility to receive credit, along with other strategic information that each creditor determines. Between your score, and your credit report, your financial health depends on obtaining, and maintaining, a good credit rating.

You Can Have A Different Score With Each Agency

Fair Isaac Company created the Beacon FICO score which is the one most commonly used.

The three major credit bureaus, Equifax, Transperian (formerly TRW), and TransUnion, carry information about you and your credit. This can result in your having 3 different scores if the data is different from bureau to bureau, which is often the case.

It's always a good idea, to check your credit reports, and credit scores, once or twice a year. If good information is missing from one bureau, or incorrect information is present, you can request it be fixed so your credit scores and reports show the most accurate, and complete, information available across all three major credit bureaus .

The Beacon FICO Credit Score Ratings

Beacon FICO ratings range from 350 to 850, with 850 being the best rating (which gets you the lowest interest rates). Below 600 is when you may have loans turned down, or see much higher interest rates than those commonly advertised. Ratings commonly used and seen are:

500-559 560-619 620-674
675-699 700-719 720-850

How Does This Affect Your Debt Relief Choice?

For anything below the 560 rating, if you filed bankruptcy it would have a much lesser effect on your credit rating than if you filed with a rating better than 700. With a higher credit score, you might want to look at refinancing your mortgage or getting a home equity loan to restructure your debt.

If loans aren't available to you, then you may need to consider a Debt Consolidation Service or Consumer Credit Counseling Services as a means of debt relief. Debt consolidation services would be the next step with the least impact on your credit rating, after debt consolidation loans.

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