Bust Out Score

[sjt]

I was following another thread and a MFer mentioned "Bust Out Score". I never heard of it so I googled the term. Here is what I found:

Upon credit application, a risk assessment known as a BustOut Score is calculated to measure the likelihood an applicant matches an identified pattern of fraud where a criminal with a high FICO and exemplary credit behavior rapidly increases their number of bank cards before running up their balances and “busting out” before disappearing. In recent years, this pattern of behavior has become linked with criminal syndicates creating synthetic credit report entries and performing the fraud on a large scale. Bust-out fraud is also increasing due to restrictions on fraudulent behavior imposed by moving from magnetic strips to chips.

This problem is particularly difficult for banks to address because people intending to bust-out have shared characteristics similar to those of the most favored and valuable credit card customers. The behavior of churners can easily trip this BustOut Score check and instigate a manual review of a card application and account. The danger to the churner is compounded if there are identity flags raised during this review.

From public sources we can identify many of the empirical factors identified in public documentation of the BustOut Score and that are likely used as part of its calculation to ID potential bust-outs:

• Rolling six-month increase in bankcards of 2-3 and/or a ~30 percent increase.
• Rolling six-month increase of 3-4 BANKCARD inquiries and/or a ~50 percent increase.
• Average of 2.5 cards at or over 50 percent utilization that increases to 5.
• Average age of oldest tradeline significantly shorter than other good credit customers (98 compared to 205 months).
• Much less likely than good credit customers to have a mortgage (0.5 lines for bust-outs compared to 1.7 for good accounts.
• Much less likely to have an auto trade line than a good credit account (0.9 lines for bustouts compared to 1.8 for good accounts).
• Much less likely to have a credit union trade account (0.3 lines for bust-outs compared to 0.9 for good credit accounts).
• Payments by check from multiple sources (bust-outs often involve bouncing checks in the final phase to exceed credit lines).
• Asking repeatedly for credit line increases.
• Applicant is from a high-risk state such as Nevada (2.2%), Florida (1.7%) and Arizona (1.5%).
• Most purchases involve retail gift cards and high-end merchandise.

Messaged comments added after initial post

• "bust out accounts are also more prevalent on new products . When the us bank club Carlton card came out it felt like half of the accounts were bust out."

I want to add one final caution. The KEY method used in creating synthetic identities for large-scale bust-out fraud is associating the synthetic identity with a real person with a long and established tradeline by adding the synthetic identity as an Authorized User. You should NEVER allow your identity to be linked to someone you do not know through a process such as selling access to a tradeline to a supposed credit repair firm. This has a very high likelihood of linking you a synthetic identity and could pose enormous risks in the future as these webs of fraud are ferreted out using analytical techniques to discover these links.

Everything in this post is from publically available sources (see below). I am not an analyst or in any other way affiliated with a firm involved in evaluating or making credit-decisions; however, I do similar analysis to this in a professional capacity in another environment. If anyone with inside knowledge of this topic would like to correct or amend this post please send me a PM and I will make the changes anonymously.

https://www.experian.com/assets/decision-analytics/white-papers/bust-out-fraud-white-paper.pdf

https://www.experian.com/assets/decision-analytics/product-sheets/bustout-score.pdf

https://www.experian.com/innovation/thoughtleadership/synthetic-identity-fraud-white-paper.jsp

https://www.nw3c.org/docs/research/synthetic-identity-fraud.pdf

http://www.gao.gov/assets/690/686869.pdf

Props to u/artgriego for alerting me to the Experian white paper on this!

Good Datapoints from Shutdown megathreads that appear BustOut related.

• https://www.reddit.com/r/churning/comments/7jb8mp/shutdown_reports_megathread/dr72ssl/

[Moneyklutz]

Most excellent post.

[sjt]

Thanks!

Full disclosure, I copied and pasted the Bust Out information from  Reddit.

I think its important for people to know this as it give a creditor's perspective when they see alot of new accounts on CR and how we can avoid getting AA.

[Anonymous]

I know three bust-outs who went to Belize and thereabouts in the past 10 years. All had super prime credit scores, hefty incomes and in some cases unhappy marriages.

They ramped up spend and poof, next thing you know they're in a country with no extradition.

Not going to post my opinion of the process, but let's just say they're interesting folks. Got to meet one for coffee during a cruise to Honduras. Still posts actively on Facebook, just doesn't fly back to the States ever.

[sjt]

Wow.

I get Bust Out when ID theft is involved, but never knew anyone that would intentionally charge up a card then skip town. Doesnt seem worth it.

I do see alot of people who have done Strategic Default on their properties.

[Moneyklutz]

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@sjt wrote:

Wow.

I get Bust Out when ID theft is involved, but never knew anyone that would intentionally charge up a card then skip town. Doesnt seem worth it.

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Wow indeed.

Burn that bridge and it's going to be one heck of a canine female to cross back over...

[Gramz]

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@Anonymous wrote:
I know three bust-outs who went to Belize and thereabouts in the past 10 years. All had super prime credit scores, hefty incomes and in some cases unhappy marriages.

They ramped up spend and poof, next thing you know they're in a country with no extradition.

Not going to post my opinion of the process, but let's just say they're interesting folks. Got to meet one for coffee during a cruise to Honduras. Still posts actively on Facebook, just doesn't fly back to the States ever.

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ABC,

I'm from Belize and it's sad that someone will run to my country.  Well the U.S can extradite someone from Belize "13089 Belize - Treaty on Extradition" sign on March 30, 2000. 

[AverageJoesCredit]

Sjt, amazing post . Thanks buddy. I think this should be requured reading upon joining myfico lol, but uhm , seriously. If we see how sometimes our actions might be viewed, it might slow our roll. I honestly want to give it a break on apping and requesting cli and try to gain some years in aging my credit. Easier said than done but worthy a goal

[Anonymous]

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@Gramz wrote:

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I'm from Belize and it's sad that someone will run to my country.  Well the U.S can extradite someone from Belize "13089 Belize - Treaty on Extradition" sign on March 30, 2000. 

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I think it's a beautiful thing for a country that's been pummeled by inept political graft to have wealthy individuals come running to spend their money there instead of in their home country.  The ex-pat areas in Belize have better paying jobs, for sure, and more opportunities to learn skills.  Heck, there are some financial criminals down there now running data centers and other high tech industry companies that hire locals.  So it's a benefit in some ways.

The 2000 extradition treaty rarely involves white collar crimes, from what I've heard.  I also know it's quite easy to get letters mixed up on your visa/passport when changing over, again thanks to the lovely corrupt officials down there.  I always considered Belize as a possible destination when I drop my US citizenship in the future, but I kinda prefer the lesser Antilles weather-wise.  Tropical is a bit TOO muggy for me.

Next spring I am sailing from near Phillip Goldson airport to Xcalak up the coast with friends (not white collar criminals, just retirees, lol).  Love that part of the world!

[Anonymous]

Aside from the utilization part, over the last 8 months, I certainly fit this profile. Though I’d never do this, a bank can only make determinations based on the data available to them.

I also saw this on reddit when researching adverse action, “random” closures, and CLDs. Thanks for bringing it over to MF. It will certainly help us MFers avoid AA and such.