What Is A "Behavior Score"?

When it comes to your personal financial accounts, credit card companies track every single move you make. They give you a "behavior score" that determines how you spend your money. They try to make decisions regarding your account, like changing your rate or increasing your credit limit, based on this score.

The "behavior score" on your credit card is something that only your credit card company can see and something that only they will use. They determine it based on how often and in what detail you use your open credit cards. This helps them determine what kind of customer you are.

Credit is something that you do not need to have but it can be a tremendously helpful tool if you use it properly. Perhaps now, more than ever in recent history, understanding credit will be extremely beneficial to those who want to use it.

One of the things that you will need to know if you want to better understand your credit is how credit cards use different scores to determine your creditworthiness. This includes things like your fraud score and your behavior score.

What Is A Behavior Score?

A "behavior score" is a rating that is assigned to the way that you have or will act. In terms of credit, your "behavior score" is something that credit card issuers will use to evaluate the risk you pose as a borrower.

Why Is A Behavior Score Important?

Your behavior score is determined by the way that you normally treat your credit card. For instance, if you have one credit card with a single balance and you make regular monthly payments, your "behavior" would be considered "normal." If your credit card balance suddenly shoots up or your payment stops coming in regularly, your credit card company will probably question the behavior.

Also, your credit card company tracks where you shop. Perhaps you have a gas card that rewards for your tank fill-ups and that is all or mostly what you use it for. If your credit card statement suddenly reflects that you are shopping at high-end boutiques, then the credit card company might send up a red flag.

What Happens If Your Behavior Score Changes

Generally, there are few things that your credit card company will probably do if your "behavior score" changes:

• Decrease your credit limit to prevent you from overextending
• Increase your interest rate, which also raises your monthly payment. This ensures that the bank or financial institution who issued the card will recoup the costs and any losses just in case you default or continue to be able to make good payments.
• Deny reissuing of the card when it expires

It's important to remember that nothing is personal. Credit card companies are trying to protect their bottom line. Just because you are a responsible consumer doesn't mean that the next person with a similar situation will be. At the same time, if you continue to be responsible you will be able to earn the trust of your credit card company again.

For example, if you are deemed to be a good credit risk (like if your behavior score increases) your credit card company might do things that promote more spending (in hopes of generating more profits for them). This could include:

• Increasing your credit limit
• Offer you promotional interest rates on a new line of credit
• Offer you convenience checks to make it easier to access your credit.

Final Word

Credit card companies use your "behavior score" to determine what to do with your account. If your score increases it is likely your benefits will also increase as well. However, if your score decreases, you will probably lose some benefits instead.