You have watched your credit score closely to help raise it to a quality number. Excited, you go to apply for a mortgage only to find out that you don't qualify for the interest rate you believe your credit score should get you. Is it just a big mistake, or is there something else going on?
Most people are well aware that they have a credit score that helps to determine their credit rating. They also know this score can affect everything from the amount of interest they pay on their credit cards to what interest rate they qualify for when applying for a mortgage.
What most people don't realize, however, is that the credit bureaus also keep a second score on everyone: the bankruptcy risk score. Although this score has been in use for more than 20 years by the credit bureaus, you probably have never heard of it until now.
Your credit score and bankruptcy risk score have a number of similarities, but they are two distinct scores used by those seeking information on your creditworthiness. A credit score is based primarily on a person's credit history of obtaining and paying off debt. The bankruptcy risk score, on the other hand, is a calculation of the likelihood that a person will file for bankruptcy in the future.One of the major differences between the two scores is that anyone can request a credit score. Upon receiving it, you may dispute items on it to make it accurately reflect your credit history. This is not possible with the bankruptcy risk score. It's not available to individuals to review and is an exclusive report for lenders provided by the credit reporting agencies.
Another major difference between the two scores is the way that the score numbers are read. Your credit score is a number between 350 and 850, with a higher score indicating you have better credit. The bankruptcy score is read the opposite way, and its number range is much larger than the credit score's. Your bankruptcy score is a number between -200 and 2018; the lower the score, the less likely you are to file for bankruptcy.