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Uncovering hidden credit scores

Other scores 
q_v2.gifAre those all the scores that are out there?

a_v2.gifNo. There are also insurance scores that predict the likelihood of you filing a claim, or predict the likelihood of you being a profitable insurance customer. Fair Isaac builds those and a company called ChoicePoint, which was just acquired by Lexis/Nexis, also builds those. Those use information off of your credit report and also previous claim data. ChoicePoint actually houses a claim database. They'll use that data in addition to your credit data.

There's also something called an application score. A credit score takes information off your credit reports. An application score takes information off your application. In other words: How long have you lived at your current address? Do you have a checking or savings account? How long have you been on this job? How long have you been in the same industry? What's your salary? These are things that aren't on a credit report that you can get from a credit application. What's your debt-to-income ratio? What's the loan-to-value on the property? How much down payment are you putting? How much cash do you have in the bank as reserves? Those are all things that are on an application that you can score -- but not with a credit score.

A lot of application scores use a credit score as an input. Kind of like an insurance score, where it uses insurance data and credit data -- well, this would use application data and credit data. Lots and lots and lots of the big banks use application scores because they are very, very powerful -- more powerful than just a credit score itself. The more external data you can bring in, the more powerful the scoring model is going to be.

q_v2.gifHow many different scores are there?


a_v2.gifOh, countless. Take every single bank -- name every single bank you can think of. Obviously all the big boys -- the Chases and the (Citibank)s and the (Bank of America)s -- they have dozens of custom models that they use, and even when you start getting smaller and smaller to banks like PNC and Compass Bank and SunTrust, Wachovia, Union Planners, First Tennessee. I wouldn't call those megabanks, but I also wouldn't call those a credit union. Even those guys are using some sort of pooled model or custom score cards that they'll either build themselves or have someone build for them. Those are all different scores -- they're not all the same thing. But then when you get down to the credit union size, the Joe's Bank, where there's two branches in the city and that's it, those guys are pretty much depending on FICO. If you had to put a number on it, I would think it'd be impossible. You'd have to interview every single bank and ask them how many models they use. I would say you wouldn't be exaggerating at all to say well into the hundreds, if not more.

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