Credit Card Debt Management

There is an interesting article on MSN Money today about the different criteria lenders use to judge you. According to the article, the sacred cow known as the FICO score is just the beginning of the process, and is far from the most commonly referenced factor. The following list encompasses just a few of the other factors lenders examine:

Response score: How likely is it that the consumer will respond to marketing mail-outs? What type of credit card offer could elicit a response? Balance transfer? A bad credit rebuild offer? This score helps lenders decide who to target.

Application score: How much do you earn? How long have you lived at your current address? Lenders will cull information like this from your credit application before deciding things like how much credit you deserve and whether they should lend to you at all.

Bankruptcy score: How likely is it that you will file for bankruptcy and give up on trying to pay off your debt at all? The higher you fall on the scale of 1 to 300, the lower risk lenders see.

Revenue score: Lenders are a money machine. They want to make profit, so how much profit can you bring? Basically, do you ever pay late? Do you ever pull cash advances off your credit line? Actions like this make lenders see dollar signs.

Attrition-risk score: What is the likelihood that you will stop using the card? This may be to pay off debt or as a result of a balance transfer. No matter the case, lenders are watching and planning their next move should you appear ready to run. Hint: Appearing ready to run could be a good way to get a lower APR from your lender, if the stars are aligned in your favor.

Behavior score: Lenders are watching how you manage your accounts. Is minimum payment standard for you? What about late payments?

Transaction score: Lenders can tell a lot from your transactions. Did your spending habits suddenly shift from family restaurants and the grocery store to bars and the racetrack? Believe it or not, lenders monitor what and where you are buying each and every time you buy. This is largely to ensure that the transaction is not fraudulent. However, changes in spending patterns can indicate changes in your economic standing in life.

The unfortunate thing is consumers are not entitled to this information as they are entitled to their FICO score. All other scores are generally considered proprietary information used by lenders in their decision making. However, the article points out that - even if you could get the scores - would you really want to? All the data can get quite confusing and overwhelming, so maybe it’s best not to know.