rssYour Credit Card Company Says, ‘For Shame!’
Friday, June 20, 2008 at 9:50 am
- 2 Comments
Now this is rich: Credit card companies apparently monitor your spending and cut credit lines when they think you’ve gone morally astray. So if you’ve been to a marriage counselor, run up a bar tab, gone to a billiard hall, or visited a massage parlor, your credit issuer might limit your credit in return.
The allegations that credit firms go far beyond FICO scores for credit decisions came in lawsuit filed in federal court in Atlanta by the Federal Trade Commission against subprime card issuer CompuCredit. The FTC contended the firm didn’t properly disclose these practices, BusinessWeek says, in a story entitled “Your lifestyle may hurt your credit.” The FTC suit “offers a rare look inside the opaque business of credit scoring,” the story explains. From BusinessWeek:
It reveals a mechanism that consumer advocates and politicians have long suspected exists—one in which purchasing behavior, not just payment history, matters.
So. Credit card firms spent much of the last decade heavily marketing their products to anyone who could breathe, mass-mailing pre-approved applications to children, dogs, and people who had never paid a bill on time in their lives. They hid fees in the fine print, hiked interest rates on people for reasons they never understood, and piled on charges to consumers who fell behind, keeping them in a permanent state of debt. And now they’re claiming higher moral standards in determining who gets credit and how much they get. Credit card firms as moral arbiters? Has it really come to this?
Apparently it has. BusinessWeek says more financial firms are looking closely at consumer behavior in deciding creditworthiness. Since companies don’t have to reveal the ways they come up with credit decisions, people can’t tell what formula was used to either deny or limit their credit, and they won’t know whether the decision was made in a fair and proper way. We talked about another problem with credit decisions earlier this week, noting that credit bureaus and credit card companies are accused of offering better treatment to powerful and important customers, such as judges and politicians. I wonder if card issuers will monitor those VIPs in the same way.
To see the flip-side of decisions made by credit card companies, listen to stories from people in Granger, Ind., who have turned to a support group for help as they grapple with credit card debts.
2 Comments
Comment posted October 13, 2008 @ 12:08 am
Seeing these conditions i m sure the FICO scores of many rich businessman in USA will go down. Its better to start improving it immediately. I will start it with an example as in you may be out of school, but that doesn’t mean you’re free from report cards. In fact, if you want to buy a house, or any other big-ticket item, a lender will look up your “grade” as soon as you come knocking. That grade is your credit score.
There are many varieties of credit scores available to lenders. But the most widely used for large loans are FICO Scores, which are based on a scoring system developed by Fair, Isaac & Co. Following are five things you can do to boost your creditworthiness, plus more information on obtaining your personal score.
1.) Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan.
2.) Paying your bills on time is always a good practice, and it’s especially critical that you make prompt payments close to the time you need a loan.
3.) A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit. Generally, it’s good to keep your balances at or below 25 percent of your credit card limit
4.) Pay off debt rather than moving it around i.e. since the ratio of your credit card balance to your credit limit is key, closing out an account and transferring the balance simply means you increase that ratio, which is likely to lower your score.
5.) Don’t close unused credit card accounts near loan time.
For more information please visit this site: http://www.creditmagic.org
Comment posted October 13, 2008 @ 7:08 am
Seeing these conditions i m sure the FICO scores of many rich businessman in USA will go down. Its better to start improving it immediately. I will start it with an example as in you may be out of school, but that doesn’t mean you’re free from report cards. In fact, if you want to buy a house, or any other big-ticket item, a lender will look up your “grade” as soon as you come knocking. That grade is your credit score.
There are many varieties of credit scores available to lenders. But the most widely used for large loans are FICO Scores, which are based on a scoring system developed by Fair, Isaac & Co. Following are five things you can do to boost your creditworthiness, plus more information on obtaining your personal score.
1.) Review your reports from all three credit bureaus for accuracy once a year as well as several months before applying for a loan.
2.) Paying your bills on time is always a good practice, and it’s especially critical that you make prompt payments close to the time you need a loan.
3.) A heavily weighted factor in your FICO score is how much money you owe on your credit cards relative to your total credit limit. Generally, it’s good to keep your balances at or below 25 percent of your credit card limit
4.) Pay off debt rather than moving it around i.e. since the ratio of your credit card balance to your credit limit is key, closing out an account and transferring the balance simply means you increase that ratio, which is likely to lower your score.
5.) Don’t close unused credit card accounts near loan time.
For more information please visit this site: http://www.creditmagic.org
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