Bankruptcy risk score
Encyclopedia
A bankruptcy risk score is a number that indicates the likelihood of an individual filing for bankruptcy
. Although it has been used for over twenty years to assess risk in lending, few consumers know of it. It is related to the better-known credit score
, but unlike credit scores, bankruptcy risk scores are not sold to consumers by any of the credit bureau
s. Consequentially, individuals have little or no way of knowing what their bankruptcy risk scores are or how to adjust them downward.
This is also referred to as debt analysis which allows lenders the ability to assess a customers' risk in taking out a loan. One can improve their score by paying bills on time, keeping balances low, and having few revolving accounts.
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
. Although it has been used for over twenty years to assess risk in lending, few consumers know of it. It is related to the better-known credit score
Credit score
A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person...
, but unlike credit scores, bankruptcy risk scores are not sold to consumers by any of the credit bureau
Credit bureau
A credit bureau , or credit reference agency is a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. It is an organization providing information on individuals' borrowing and bill paying habits...
s. Consequentially, individuals have little or no way of knowing what their bankruptcy risk scores are or how to adjust them downward.
This is also referred to as debt analysis which allows lenders the ability to assess a customers' risk in taking out a loan. One can improve their score by paying bills on time, keeping balances low, and having few revolving accounts.