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Secret Credit Score(s) You Don't Know About
Organization - a.k.a. Your Credit Score. This is the score that everyone pays attention to
In addition to your FICO score (including the three major credit reporting agencies -
TransUnion, Experian and Equifax), there are a number of other scores that may affect your
disclosed to us (regular folk) whatsoever. Some of these score calculations are even derived
from the main credit reporting agencies.
The first type is called the Behavior Score. The Behavior Score is basically a score as to how
well you handle all of your active credit accounts. The creditor typically focuses on a single
account within an institution. This is generally an overall view of the account and will take into
consideration your payment patterns. Things like carrying a credit balance, paying the
minimum, etc. These scores generally help the creditor identify any unusual behavior with
your account that may require some attention. The Behavior Score could be used to make a
educated prediction that you may be approaching a financial crisis.
The next 2 scores I would like to talk about are the Response Score and the Revenue Score.
The Response Score is pretty simple: it is a score that is derived which will project to a
creditor how likely you will be to answer an offer for credit and credit promotions. This could
be in the form of a new credit card or a credit card balance transfer offer. Creditors use this
information to determine who they will target pertaining to new offers. Keep in mind soliciting a
new credit card customer is serious business to the big boys (Visa, MC, etc), in which they
usually target those consumers who are likely to fall into the debt trap.
We also have the Revenue Score which in simple terms, is a score that determines how much
money they (the creditor) will profit from you (the consumer) by offering you credit.
For example, if you have a history of paying your balances in full you are not making the
creditor a great deal of money, but if you are a consumer that has a documented history of
paying just the minimum payment and keeping your cards maxed out, you probably will have
a high Revenue Score.
We now come to the Attrition-Risk Score. What this score projects to the creditor is the
likelihood that a credit user (you), may stop using their card. The Attrition-Risk Score is
generally used in conjunction with other scores to determine what actions the creditor will
take next.
As an example, if your credit habits equal "big bucks" for the creditor and you are a low risk to
their bottom line, they will not want you to leave them as a customer, which means they will
jump through hoops to have you stay. The creditor may entice you to stay by offering a credit
limit increase or perhaps bombard you with convenience checks, etc. They will aggressively
pursue you to stay with them. This is a good time to negotiate a lower interest rate or a credit
limit increase.
On the flip side, if you seem to be of high risk or a "low income generator" for their bottom
line, the creditor may just let you leave them and not worry too much about losing your
business.
The last score I am going to discuss is the Application Score which is a score that is derived
from the information you provide on a credit application. It takes into account your income,
how long you have been employed and other factors such as how long you have lived at your
current address. Basically it is a score that utilizes all of the data you provide on your credit
application(s) over a long period of time.
The application score is used in conjunction with the above mentioned scores to determine
whether or not credit will be granted to you, the amount of credit and your annual interest
rate.
In addition to your FICO score (including the three major credit reporting agencies -
TransUnion, Experian and Equifax), there are a number of other scores that may affect your
disclosed to us (regular folk) whatsoever. Some of these score calculations are even derived
from the main credit reporting agencies.
The first type is called the Behavior Score. The Behavior Score is basically a score as to how
well you handle all of your active credit accounts. The creditor typically focuses on a single
account within an institution. This is generally an overall view of the account and will take into
consideration your payment patterns. Things like carrying a credit balance, paying the
minimum, etc. These scores generally help the creditor identify any unusual behavior with
your account that may require some attention. The Behavior Score could be used to make a
educated prediction that you may be approaching a financial crisis.
The next 2 scores I would like to talk about are the Response Score and the Revenue Score.
The Response Score is pretty simple: it is a score that is derived which will project to a
creditor how likely you will be to answer an offer for credit and credit promotions. This could
be in the form of a new credit card or a credit card balance transfer offer. Creditors use this
information to determine who they will target pertaining to new offers. Keep in mind soliciting a
new credit card customer is serious business to the big boys (Visa, MC, etc), in which they
usually target those consumers who are likely to fall into the debt trap.
We also have the Revenue Score which in simple terms, is a score that determines how much
money they (the creditor) will profit from you (the consumer) by offering you credit.
For example, if you have a history of paying your balances in full you are not making the
creditor a great deal of money, but if you are a consumer that has a documented history of
paying just the minimum payment and keeping your cards maxed out, you probably will have
a high Revenue Score.
We now come to the Attrition-Risk Score. What this score projects to the creditor is the
likelihood that a credit user (you), may stop using their card. The Attrition-Risk Score is
generally used in conjunction with other scores to determine what actions the creditor will
take next.
As an example, if your credit habits equal "big bucks" for the creditor and you are a low risk to
their bottom line, they will not want you to leave them as a customer, which means they will
jump through hoops to have you stay. The creditor may entice you to stay by offering a credit
limit increase or perhaps bombard you with convenience checks, etc. They will aggressively
pursue you to stay with them. This is a good time to negotiate a lower interest rate or a credit
limit increase.
On the flip side, if you seem to be of high risk or a "low income generator" for their bottom
line, the creditor may just let you leave them and not worry too much about losing your
business.
The last score I am going to discuss is the Application Score which is a score that is derived
from the information you provide on a credit application. It takes into account your income,
how long you have been employed and other factors such as how long you have lived at your
current address. Basically it is a score that utilizes all of the data you provide on your credit
application(s) over a long period of time.
The application score is used in conjunction with the above mentioned scores to determine
whether or not credit will be granted to you, the amount of credit and your annual interest
rate.