What is the snowflake test? Well, I am so glad you asked. A few years ago I wrote a blog post called “How to Test if You Have Snowflake Employees”, in which I discussed how to determine whether your employees are out of the ordinary, or known in management circles as “snowflakes”, due to their extraordinary talents and accomplishments.

At the time I wrote the post, I thought it was intended only for my family business customers. As fate would have it, this post has become one of my most popular ever with almost 25k views!

What is the snowflake test?

The snowflake test is used in the credit industry to determine if your loans are “unusual” enough to be denied. It’s meant to check for risks, and it looks at how well loan companies can predict the likelihood of default.

The snowflake test is based on the idea that when your credit card company or lender sees you take out a new line of credit, they will look at your history and see if it matches the characteristics of other borrowers. They compare your credit score to other people who have received similar types of loans in the past, and try to predict who is likely to go backward in repayments.

If you’ve applied for several different types of loans over time, that could give credence to lenders’ suspicions that you’re trying to game the system. The more different types of loans you’ve taken out, the more likely you are to get rejected.

The snowflake test is a scoring algorithm used by lenders and credit bureaus to determine whether someone has a good or bad credit history. It’s considered a “soft” factor, because it is based on the information that is available to most creditors and financial institutions at the time of the application, rather than looking at your actual credit report.

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This is what the test looks like:

Although most people don’t know about the snowflake test, you can bet that the company you’re applying with does. That means they’ll want to give you a shot at approval — and they’ll need to make sure you haven’t been denied elsewhere before they invest in your business.

To determine if you are a snowflake, you will take the following steps:

Step 1: Determine your total lines of credit. If you have less than five lines of credit, you are likely not a snowflake.

Step 2: Calculate the number of cards that you hold, including charge cards and store cards. If you have more than five cards, your scores will probably be too high.

Step 3: Calculate the amount of debt that you carry each month. If you carry less than $2,500 in debt each month, your scores will probably be too low.

Step 4: Assess your geographic location and employment status. If you are employed full time or part time and reside in an urban area, it is likely that your scores will be too low.