credit cards

Uncovering hidden credit scores

Also, if you have a typical pattern of your usage of the card and then all of a sudden you do something atypical, sometimes you'll get a phone call from their fraud department trying to verify that you are in fact buying $5,000 worth of diamonds with your card. You've gotten those calls -- I think we all have. That's the result of a fraud score.

So, now that you're an existing cardholder and you're using it, you're either revolving a balance month over month or you're paying in full. Every single month that you have the card, the credit card issuer is calculating what's called a behavior score. A behavior score calculates just the activity on that one card, not anything else that has to do with your credit. What they're doing there is essentially taking your temperature on a month-to-month basis to determine, is Leslie McFadden's risk changing? Do we need to modify the terms of her account? Or do we just need to let her be? Is there something we can do to entice (her to) use the card more? Because remember, they're trying to make you into a profitable customer using all means necessary to do so.

A behavior score can also be used when it comes time to reissue the card. Do they want to give Leslie a credit limit increase? Do they want to give her a credit limit decrease or do they even want to reissue the card? Do they want to reissue the card and start sending you convenience checks or balance transfer checks? They use that behavior score for a variety of purposes, but specific to just that one card.

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Negative cardholder behavior 
Now, let's say Leslie's had the card for a year and she's never used it, so now she's not really generating any revenue, then they'll use a tool called an attrition score. They'll score your credit report with this attrition score. What they're trying to find out here is, is Leslie ever going to use the card? Have we been a victim of attrition, meaning that she's chosen to use another card in lieu of ours? If so, do we want to take aggressive means to try to get Leslie back as a customer? Or do we want to just choose to let her off in another direction and essentially choose to lose her?

Now let's say that Leslie has a huge balance and she's also got huge balances on other credit cards. She's starting to miss payments on other credit cards, and during the month-over-month process of account management, I notice that your FICO score has gone down and I'm little concerned about that. So I'm either going to close your account, reduce your credit limit, increase your interest rate or a do a variety of the other nasty things like lower your grace period, start aggressively calling you if you're over a day or two late. It's just the same general-use FICO score, the bank card score, but it's just another use of it.

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