Are You Aware of These Financial Scores?
July 8, 2009 by Miranda Marquit
Filed under Finance
You know about your credit score . And you know that it is used, in general, to give a number of people, from landlords to lenders to employers, an idea of how fiscally responsible you are. But your credit score is not the only financial score being used to assign you risk. In fact, there are other “secret” scores used in conjunction with your credit score to determine what sort of financial person you are. And, unlike the credit score, companies are not required to disclose this stuff under the Fair Credit Reporting Act . If you ask me, there is waaaaaay too much of our information that we don’t have access to.
At any rate, Cash Money Life offers a list of eight secret scores that take your personal financial information and use it to make a number of determinations:
- Response score – This is a score based on the probability you’ll respond to an offer they send you.
- Application score – This score incorporates all the data on your application.
- Bankruptcy score – This score tries to predict how likely you will to declare bankruptcy.
- Revenue score – This score tries to predict if and how profitable you will be to the institution.
- Attrition-risk score – This score tries to predict how likely you will stop using their products.
- Behavior score – This score tries to predict future behavior, as nebulous as that sounds.
- Transaction score – Every time you charge something to your card, a transaction score is calculated to determine whether to approve the charge.
- Collection score – This score is used on accounts in collections by collection agencies to determine how “collectible” it is.
Honestly, I think the scariest of these are the revenue, behavior and transaction scores. These seem especially invasive. Especially since it would only take a little bit of tweaking for the transaction score to compile every spending choice you make . What happens if a night on the town, via transaction and behavior score, was used against you in the future? Maybe I’m starting to sound paranoid, but the fact that we don’t have a clear view of these scores — and that there are no immediate efforts to make them more transparent — does worry me. Does it worry you?
Image source: VolatileChemical via Wikipedia
It is concerning that we don’t have a clear guide as to what determines out scores. But I can understand why that is the case too. If it was fully disclosed then FICO would lose their competitive edge and there would be many who would find ways to “game” the system.
I can understand the proprietary scoring model. But that assumes that you agree that it is right to be charged for vital information based on your own consumer behaviors.