Your Credit Score is Just the Beginning

Lenders are quick to tell you that the interest rate they’ll offer you will be based on your credit score. And by now you know that others are interested your credit scores as well. That includes satellite TV providers, cell phone service providers, potential landlords, and even potential employers.

What they don’t tell you is that they’re also looking at a host of other scores, and that every time you pull out your plastic and make a transaction, some kind of score is being generated.

Scoring formulas are created by credit bureaus, lenders, and third parties – and they’re all used to judge you. Here are some of the most common:

Application Score: This one collects data from credit applications you’ve made and includes items not found on your credit report. These items include the length of time you’ve been with your current employer, how long you’ve lived at your current address, and how much you earn. Lenders use this score in conjunction with your credit score and bankruptcy score when deciding whether to open an account, and if so, how much credit to extend and at what rate.

Bankruptcy Score: This one predicts the chance of you filing bankruptcy within the next 2 years.

Revenue Score: This one gauges how much money a lender is likely to earn if they extend credit to you.

Attrition-risk score: Since some consumers simply stop using one card or another, this score is used to help your credit provider decide what to do when you stop using theirs. Depending upon your score they will either work aggressively to keep your business, or let you quietly go away. If your attrition risk score shows that they could make a lot of money with your account and you have little risk of default, you’ll suddenly find your credit line increased, your interest rate lowered, and your mailbox filled with “convenience checks.”

Behavior Score: Since word got out about this one, some consumers are up in arms. This in an “in-house” score kept by your credit card issuer that tells them where you’re spending your credit. A change in your behavior can be a signal that you’re becoming a greater risk, and they’ll respond by lowering your limits and raising your interest rates.

Back when credit card issuers were pursuing new customers, they used a Response Score to decide if mailing to you would be profitable.

And now, in a time when so many credit card holders are going into default, collection agencies are using a Collection Score to decide how actively to pursue you for payment. Like credit issuers, collection agencies want to use their time and money where it will return the most profit. If your collection score indicates that you do have money to repay a debt, they’ll be more aggressive than if your score shows that you have no means of coming up with the money.