Bankruptcy Risk Score – The Credit Score You Don’t Know About

It seems that most people are now aware that their credit score can have a large impact on the financial aspects of their lives. Many, however, have no idea that institutions checking their credit often use another score that is sometimes referred as the “hidden credit score” – your Bankruptcy Risk Score.

While your credit score is a score assessed to you based to a large extent on your history of obtaining credit and paying off debt, the Bankruptcy Risk Score measures how likely you are to file bankruptcy. The Bankruptcy Risk Score is exclusively for lenders provided by the credit reporting agencies and not available to individual consumers.

This bankruptcy score is supposedly a complex mix of your credit score plus your spending habits (yes, all that information of how you use your credit card, shopping cards and any other way they can assess what you buy with it is likely factored into this score). The credit agencies and those that use this report (and have contributed to creating it) have been reluctant to reveal exactly how the the model works and what it is based upon because they see it as proprietary information. They spent a lot of time and money developing it and if they explain it, they are giving away part of it’s value. Therefore little is said about this report (and why you have never likely heard of it before).

Bankruptcy Risk Score - little is still known about this hidden credit score

One of the credit bureaus (Experian) has said that it is considering making its Bankruptcy Risk Score available to consumers, but hasn’t made any commitment to when this might happen (or if it ever will). There have just been glimpses for the public that the score exists. For example, Experian revealed a study last July which ranked which states had consumers who were most likely to file for bankruptcy within the next year. Texas was number one on that list.

While the exact mechanics of what makes up the score are not publicly known, insiders say that the Bankruptcy Risk Score is scored the opposite of your credit score. Unlike your credit score where you want the highest score possible, your want the lowest possible score for your Bankruptcy Risk Score. Apparently this score goes from negative numbers to approximately 2000 (2000 being the worst high risk of bankruptcy level). Experts guess that many of the same things which improve your credit score such as paying your bills on time and not over applying for credit will also improve your Bankruptcy Risk Score.

Since information on this score is still fairly limited, it will pay to keep your eyes open for news about it – especially if you watch your credit card score closely.

Source: Saving Advice

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7 Responses to Bankruptcy Risk Score – The Credit Score You Don’t Know About

  1. Cap says:

    huhh.. never heard of this before.

    interesting! gonna see if I can dig up more info.

  2. Pretty interesting Jeffrey. It does make me wonder if it will get picked up by others and get a little momentum going to put some pressure on them to tell us a little about what it is they’re doing. I wrote about it tonight when I caught it on your blog.

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  5. garrett1 says:

    Hello and in-advance thank you for all your comments.

    I filed a BK 18 months ago. My fico scores are 618, 572 and 632. I was able to keep my home but I had to list my mortgage company in the BK forms, they were listed in section titled “Schedule F”. When I pulled up all three credit reports I saw that the Mortgage company listed me as closed and Past Due $0.00. I have never been late with this mortgage company and alway paid extra every month. Why are they reporting me as BK, and showing no payment history when I never placed them on the list for releaf in my BK. Could I ask for them to reaffirm our agreement and get them to remove the Neg results?

    In-advance, Thanks garrett1

  6. pfadvice says:

    You can see some answers to your question in our discussion area

  7. Mike says:

    This article is absolutely wrong with regard to scoring. This is from Experians website:
    Bankruptcy Watch adds confidence
    to your credit decisions. It ranks
    your accounts across the spectrum of
    creditworthiness, clearly illuminating
    the risk level associated with each
    account. The model generates one
    score per report, between 1 and 999.
    The higher the score, the less likely
    the consumer is to file for
    bankruptcy or exhibit serious
    delinquent or derogatory behavior.
    You set a cut-off score based on your
    portfolio objectives.

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