When it's time to secure some type of loan, whether it's for your new home, your next car, or to help pay for college, you will no doubt be confronted with your credit scores, which are also referred to as Beacon scores.

Beacon scores were developed by Equifax, which is one of the three major credit reporting bureaus, to help summarize a person's credit report and make it easier to create a standard of comparison. Each credit bureau has slightly different criteria and ways of evaluating your credit history, so your score may vary a bit from one credit reporting agency to another, but they will all be in the same general range, unless one of your accounts is not being reported to all three bureaus.

FICO is also a name for the credit scores, and is a rating system developed by Fair Isaac Company (FICO), and sometimes the two terms, Beacon scores and FICO scores, are used interchangeably.

A Beacon score can range anywhere from a low of 300 points to a maximum of 900 points, with the average score falling somewhere between 500 and 800 points. The higher your number, the better your score and the better terms you are likely to get from the lender you are working with.

To the lender, your credit score quickly communicates how much high a risk you are to the company lending you the money and is essentially a general estimate of your creditworthiness to the lender.  In other words, this is the information that lenders will use to determine the interest rate and other terms of your loan.

Some lenders will also look "behind" the score, and will read the details of your report to pick up on any additional criteria their organization has set for lending, because each company that is willing to lend money may have different guidelines set by their owners or stockholders. However, lenders tend to be very tight-lipped about the specifics of their criteria, and if you are turned down, you are likely only to get a generic reason.

Nevertheless, there are some guidelines available about what the different variables are and how they can help improve credit scores, or can be responsible for lower Beacon scores.

On the positive side are things like: steady and stable job history, actively using your available credit with a few accounts, a history of on-time payments, utilizing under 80% of the total available credit across your different account, and a limited number of requests for additional credit.

The negatives that can stack up against you are: repeated times of unemployment or underemployment, many recent applications for new credit, multiple accounts for credit cards, small unsecured finance loans, missed payments or late payments (especially a pattern of late payments, as opposed to one or two over the course of a couple years), having your balances add up to more than 80% of the total of your available credit, the total amount of your outstanding debt (especially as compared to your income), and of course there are the "biggies" such as bankruptcy, collection activity, defaulted loans, foreclosures, judgments, liens, and repossessions.

Sometimes it's difficult to consider that your financial life is summarized by a credit rating system and analyzes the data and doesn't take the personal element into account at all, but it is a fact that if you want to operate in the world today with any kind of credit, you will need to know about Beacon scores and how you can improve yours.