Before you ever received this letter of invitation from a credit card company calling you to ask their card, they were watching.
Naturally, they check your standard credit score. They do not want new customers who are most likely to pay their bills every month. But they did not stop there. Sometimes even people who now pay their bills are turning to bankruptcy as a way to stop.
Thus, they will check your bankruptcy scores. Equifax provides a score called the bankruptcy navigator index, or BNI. This score, and others like it, predict the likelihood that you file bankruptcy in the future.
But knowing that you are a security risk is not enough information to put you on the mailing list. They want to know if they are likely to get a good return on investment in the mail for you.
More scores help them make the decision to add you to the mailing list, or remove you from their list of potential customers.
direct mail package is not cheap, so these lenders want to know the probability that you make it interesting for them. They want to see a high probability that you say yes to the offer. The credit score they use to decide if you go on the mailing list is called a “pattern of response.”
But this is not enough to know, either. You could have solid gold credit, and you could enjoy owning a handful of credit cards. But if you issue a card will not result in revenue for the credit card issuer, they are not really interested in doing business with you.
You might be one of those customers labeled a “deadbeat.” No, not because you do not pay, but because you always pay. Customers who pay every bill in full without incurring interest charges, fees charges late payment or over-limit are simply not very profitable for the lender. All any of them on your credit card use is the amount the retailer pays for the privilege of maps. And – they’ll still have to spend the money you send a monthly statement. They use a revenue score for it.
Finally, having mailed in the application, they apply another partition. This is a back-end credit report and determines the credit limit and interest rate they will offer when they mail back your card.
The final score, by the way, is why you might respond to an offer for a $ 50,000 line of credit at 4.9%, but when the card arrives, it has a credit limit of $ 5,000 to 14, 9%.