Posted on 03/04/2006 7:08:52 AM PST by Dallas59
It seems that although most people are now aware that their credit score can have a large impact on the financial aspects of their lives, many still have no idea that institutions checking their credit also often use another score that is sometimes referred as the “hidden credit score” - your Bankruptcy Risk Score.
While your credit score is a score assessed to you based to a large extent on your history of obtaining credit and paying off debt, the Bankruptcy Risk Score measures how likely you are to file bankruptcy. The Bankruptcy Risk Score is exclusively for lenders provided by the credit reporting agencies and not available to individual consumers.
This bankruptcy score is supposedly a complex mix of your credit score plus your spending habits (yes, all that information of how you use your credit card, shopping cards and any other way they can assess what you buy with it is likely factored into this score). The credit agencies and those that use this report (and have contributed to creating it) have been reluctant to reveal exactly how the the model works and what it is based upon because they see it as proprietary information. They spent a lot of time and money developing it and if they explain it, they are giving away part of it’s value. Therefore little is said about this report (and why you have never likely heard of it before).
Bankruptcy Risk Score - little is still known about this hidden credit score
One of the credit bureaus (Experian) has said that it is considering making its Bankruptcy Risk Score available to consumers, but hasn’t made any commitment to when this might happen (or if it ever will). There have just been glimpses for the public that the score exists. For example, Experian revealed a study last July which ranked which states had consumers who were most likely to file for bankruptcy within the next year. Texas was number one on that list.
While the exact mechanics of what makes up the score are not publicly known, insiders say that the Bankruptcy Risk Score is scored the opposite of your credit score. Unlike your credit score where you want the highest score possible, your want the lowest possible score for your Bankruptcy Risk Score. Apparently this score goes from negative numbers to approximately 2000 (2000 being the worst high risk of bankruptcy level). Experts guess that many of the same things which improve your credit score such as paying your bills on time and not over applying for credit will also improve your Bankruptcy Risk Score.
Since information on this score is still fairly limited, it will pay to keep your eyes open for news about it - especially if you watch your credit card score closely.
How do I get my Bankruptcy Risk Score to a level where I won't be "pre-approved" for endless amounts of credit. I'm tired of all of the regular mail and e-mail on the subject. My suspicion is that there is no level at which you won't get pre-approved.
Articles like this one - which you will never see in a newspaper or magazine - are made available to us through Free Republic: Cheers for Free Republic and Jim Rob!
Have you ever noticed that in just about every major and minor city in America the largest buildings are bank buildings? They didn't get big by being nice and polite to their "clients" either. I've always liked what Harry Truman said about banks..."they will loan you money when you can prove you don't really need it!" Kinda sums up what they still do.
The credit bureaus say that this is not the case. No matter how many car (and home) loan inquiries, they are treated as only one, for a period of two weeks or so after the first inquiry. They realize that people are shopping around, and that they intend to buy only one car or house rather than 50.
-ccm
If it were your money, wouldn't you?
Yeah...but the best looking ones are the funeral homes.
wonder if Homeland Security can rent their program???
Bump for later.
FreePaul,
Of course banks will send recently discharged debtors those preapproved offers...they know the guy can't file BK for another 7 years!
***I've always liked what Harry Truman said about banks..."they will loan you money when you can prove you don't really need it!" Kinda sums up what they still do.***
Sorry, but I have to disagree with you there. What sums up banks today is that they have trained their people to SELL, SELL, SELL. Your friendly neighborhood banker no longer cares about your needs. He cares about the commissions the bank gets for selling investments.
***Of course banks will send recently discharged debtors those preapproved offers...they know the guy can't file BK for another 7 years!***
Absolutely right! And they also know that someone who has been in bankruptcy may spend foolishly, be unable to pay their credit cards, and therefor be billed for many extra penalties. It's good buisness for the banks.
This article in online ... not from FR. It was apparently written by somwone on a forum who identifies himself only as Jeffrey and provides no information about his credentials. So how imprssive can it be?
I registered with the national do not call list and with a mail version of the same thing.
I get almost no mail of any kind now, since I do all my bill payment and banking online.
Don't make sense to me, someone still has to pay the collection fee. (Us) I assume of course, many are lousy money managers, not victims of catastrophic situations.
It could be worse. Like Homer Simpson, you could be getting "pre-declined" letters.
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