There’s a New Credit Score on the Block: Predictive Credit Scores


Over the past few years, the personal finance community has become obsessed with credit scores: what they are, what they mean for our lives, and how we can improve our own. Understandably so! This is a score we’re being judged by every time we make a financial decision, so of course we want to be as in control of it as we can.

I’ve even noticed this in my peer group, which is usually quite uninterested in my work as a personal finance writer. However, when the topic of credit scores came up in conversation, one friend of mine was particularly interested. Her main concern? Finding out why her credit score was just a few points away from “perfect”.

This friend of mine is an accountant with a keen eye for detail, so it’s no surprise to me that she wanted a “perfect” credit score. Now, aside from the question of what a perfect credit score would even be, I had an incredibly difficult time convincing my friend that we don’t even have one credit score to begin with. Given the variety of models and credit score types, it’s impossible to have a perfect overall credit score.

We walked away from the conversation with my friend still unconvinced and me on an even stronger mission to help people understand how credit scores work. And now, there’s a new score on the block to add even more murkiness to the water: the predictive credit score.

What is the Predictive Credit Score

I did some research online to find out more about what a predictive credit score is and I didn’t find much. In fact, the most descriptive information I found came from The Federal Trade Commission (FTC):

“What most consumers don’t know is that data brokers offer companies scores for other purposes unrelated to credit – for example, for marketing, advertising, identity verification, and fraud prevention. Businesses use these scores to decide which transactions require further scrutiny, what offers and prices to offer certain consumers, and even in what order to answer a consumer’s customer service call.”

In short, this means that the predictive credit score can be used for a variety of reasons for their existing customers. They can use this information to determine things like what products they should market to you and how to determining the prices they should charge. But rather than get into a discussion of whether this is “right” or “wrong”, we need to start with raising awareness that this is happening. And that’s what the Federal Trade Commission (FTC) intends to do.

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How You and the FTC Can Spread Awareness of Predictive Credit Scoring

As a part of its Spring Privacy Series, The FTC is holding a seminar on March 19 to discuss the questions we as consumers may have around predictive credit scoring. Questions like, what are they and how will they be used, what does this mean for our privacy, and what are the benefits. The seminar will be held from 10am-noon EST and, if you can attend in person or watch the webcast.

This is your chance to learn about the predictive credit score from a reputable source. Knowledge is power! If you’re concerned about the predictive credit score model (or simply want to know more specifically what it is and how it works), then don’t miss this opportunity to engage in a dialogue with The FTC and other consumers just like you.

For those of you like my friend who would still like a bit more control – or at least a better understanding – of your current credit score in the meantime, check out ReadyForZero PLUS Credit and this credit score calculator.

Image Credit: wwarby

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