Lesser-Known Factors Affect Your Credit Report


MSN Money has posted an article about “secret” ways that lenders keep track of your credit score and gauge what kind of customer you would be. Credit scores aren’t the only things that companies look at.

“You’re being judged by the type of transactions you make, how you pay your bills, how much profit you generate for your lenders and a host of other factors.”

This type of information is used to determine things like:

The kind of credit card offers you get.

-Whether your credit limits are raised or suddenly lowered.

-Whether your over-limit credit or debit transactions are approved.

-Whether your card issuer calls you about a suspicious transaction, blocks it or shuts down your account.

-How cooperative your issuer is about waiving fees or lowering your interest rate.

-How quickly your issuer calls you if your payment is late.

-Whether a collection agency contacts you about an old debt and how hard it pushes.

Several other lesser-known things are taken into consideration:

-Credit-risk scores are the most well known and show companies how big of a “risk” your account will be. A score above 700 is considered to be low risk.

-Response scores “predict the likelihood a consumer will respond to an offer of credit, such as a new card or a balance transfer offer.”

-Application scores deals with data submitted to the company that’s not related to your credit score. The data includes things like how long you’ve lived at your current address, worked for the same employer and how much you earn.

-Bankruptcy score:

Credit scores typically predict the chance you’ll miss a payment in the next two years. Bankruptcy scores predict the likelihood you’ll throw in the towel on your debt entirely and file for Chapter 7 liquidation or a Chapter 13 repayment plan, said David Rubinger, spokesman for credit bureau Equifax, which produces the leading Bankruptcy Navigator Index or BNI. BNIs range from 1 to 300, with the higher the score, the lower the predicted risk. Most lenders use both credit scores and bankruptcy scores, Ulzheimer said, to help assess the risk that you won’t pay.

-Revenue scores try to predict how much profit your account will generate.

-Attrition-risk scores address the probability of a user no longer using a particular card. This score is often tied in with other scores. For example, if you are low-risk and your account generates large amounts of profit, the credit card company will likely lower your interest rates or raise your credit limit to keep your account.

-Behavior scores

provide a snapshot of how a consumer is handling all of his or her credit accounts. Behavior scores, by contrast, typically focus on a single account (the one you have with that particular creditor) but take in a broad view. Does the user pay off her bills every month, carry a balance occasionally or frequently pay only the minimums on her cards? That information typically isn’t available on a credit report, but is contained in the issuer’s databases, along with other data that helps the score describe how she handles her account. A behavior score might be used in conjunction with other scores, such as credit or bankruptcy scores, to decide whether an overdue payment is an aberration (maybe he’s traveling?) or a sign of impending financial crisis (maybe we should call the consumer today and find out what’s going on).

-Transaction scores are used every time you use your card to decide if the transaction will be approved. It is also used to determine if fraudulent transactions.

-Collection scores are used to assess whether or not you’ll be able to pay. Collection companies watch for signs of change in your financial situation, such as other accounts being paid off.

If you have had credit card or credit report issues, feel free to contact us through our website or by calling 205-879-2447.

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