Smart consumers check their credit scores regularly – for evidence of identity theft and to make sure there are no errors that could negatively affect their FICO scores. Consumers who are planning a large purchase, such as a home or car, check their reports and scores to see if they can find room for improvement.
But did you know that there are dozens, if not hundreds, of other scores being kept on you right now?
One group of scores determines whether you’ll get those mail solicitations offering you new credit cards. Card issuers use this group to narrow down the universe and choose the consumers who will go on their mailing lists.
They begin with your basic credit score – the one you know about. Then they apply a bankruptcy score to determine the likelihood of you maintaining your current patterns of behavior.
Once you’ve been deemed credit-worthy, they narrow the list further by applying revenue scores, beginning with the “response model.” They don’t want to waste the cost of mailing by sending you a letter that goes in the trash unopened. So they use a score to determine whether you’ll respond to the offer.
Next they want to see if you’ll be profitable. They’re looking for customers who will use the card and carry a balance enough of the time to generate interest income. They don’t even mind seeing an occasional late payment or over-limit fee, because those items are profitable without posing an extreme risk to the credit card issuer.
One group of customers they want to steer clear of is the group they label “deadbeats.” These are people who use their cards, but pay every statement on time. To make matters worse, some of these customers use rewards cards to actually earn a few dollars through use of their credit cards.
If you happen to be one of these “deadbeats,” you’d be wise to own 6 or 7 credit cards. Because you are an unprofitable customer, one or more of your credit card issuers could decide to drop you. The two reasons for having a credit card are to keep your FICO scores high and to have ready cash available if you need it, so don’t take chances by depending upon only one card.
How many scores are kept?
Industry experts say there’s no way to determine the total number of scores being kept on consumers. Small banks take advantage of “shelf product” scores offered by Experian, TransUnion, and Equifax, but the huge banks have their own.
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