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Your 'secret scores' affect your credit

September 25, 2009 8:21:11 PM PDT
Odds are you already know lenders are keeping track of your spending and payment habits, putting them together to come up with your credit score. but did you know that's not the only score they're keeping an eye on?So you know your credit score should be above 700. But what about your revenue score? Or your response score? Do you even know what they are? Then there's the attrition score and the bankruptcy score.

They're all what consumer experts refer to as your "secret scores." That's because not only have you probably not heard of them, but you don't get to know what your scores are in most cases.

"You can't necessarily buy your secret score," said Linda Sherry, director of national priorities, Consumer Action. "Your secret score in some cases is proprietary, or owned by the bank, so it's really not a matter of public record."

Essentially, the scores combine all kinds of seemingly random information about you to help lenders decide whether to loan you money. Not everyone uses them, but those who do get the information from you, sometimes indirectly.

"When you use your credit card you are generating basically information, statistics that are being used by the company and a lot of other companies in some cases to predict what you will do, how you'll behave, and what risk you might be to the company," said Sherry.

For example, your revenue score tells the lender how much money you might make them in interest.

"There are obviously some consumers who pay their credit card bill in full every month and they don't make much interest," said Sherry. "There are other people who carry balances -- they generate a lot of interest, but also a lot of risk."

Are you the kind of person who fills out those applications for credit that come in the mail or trashes them? That determines your response score, and your bankruptcy score looks at the likelihood you'll miss a payment or worse, go bankrupt.

"If you had a bad bankruptcy score the banks might start cutting your credit limits," said Sherry. "They might call you if your payment is one day late. They generally take a lot more interest in your account than they do for good customers."

Even the type of transactions you make matter.

"There might be a situation where you were buying a lot of groceries and practical things for a long time and then suddenly you're paying your rent and other things with credit card checks and they're going to perhaps judge that you're more risky," said Sherry.

And that may mean the next letter you get from the creditor will be a drop in the amount available.

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