What You Buy Affects Your Credit

walletpop.com ^ | 06-29-09 | Connie Prater

[KJC1]

As credit card companies continue to tighten their lending standards on card users, some are using purchasing data -- gleaned from millions of card transactions processed daily -- to weed out who may or may not be good credit risks.

Have you used your credit card at merchants specializing in secondhand clothing, retread tires, bail bond services, massages, casino gambling or betting? Your credit card issuer may be taking note -- and making decisions about your creditworthiness based on your purchasing behavior. The reason: Buying used clothing or retread tires may be an indication of financial distress and a preamble to missed credit card payments or defaults.

Now, Congress and federal regulators will be probing the extent to which credit card issuers have used information about where a person shops or what they buy as reasons to lower credit limits or increase interest rates. When credit limits are lowered, it can adversely affect utilization ratios, a measure of how much of cardholders' credit limits are used. Lowering the credit limit increases the utilization ratio and can lead to a lower credit score.

[KJC1]

Thought this was interesting.

[DonaldC]

Between the government and big business...the middle class is screwed.

[Oldexpat]

A donation to Zero’s campaign will earn you extra miles and a higher credit limit..spread the word.

[dfwgator]

Don’t give them any ideas.

[mrsixpack36]

Stay tuned. More nanny-state policies comming. Buy (or dont buy) what they tell you too or be prepared to face the concequences (bad credit, high rates, ect).

[WVNan]

Well, thank goodness the Goodwill store doesn’t take credit cards. That’s where I buy all my clothes except underwear and shoes. Why pay through the nose for new clothes when you can get perfectly good ones at Goodwill and help out the indigent at the same time? I wear my Goodwill dresses to church and all the ladies will comment on how beautiful the dress is, or “where did you buy that dress, I love it.” I know labels and I know quality. It’s like treasure hunting. Fun.

[tiki]

I guess the credit card company knows that I go to Colorado 3Xs a year, and if they checked it out, I was broke in December, but I normally use cash for everything else.

[Buckeye McFrog]

the people running these credit card firms must be absolute brain-dead idiots. After the thrashing in the woodshed they just received, you think they’d be smart enough to lie low for awhile. But by using this tactic, plus stuff like cutting credit limits (with the effect of lowering credit scores for people who are actually PAYING OFF their debt) they are just asking for the next round of Congressional Committee Anal Exams.

[SWAMPSNIPER]

I buy a lot of stuff on Ebay, the savings are too much to ignore. If it affects my rating, oh well!

[SkyDancer]

"the middle class is screwed."

There Is No Such Thing As A Middle Class In America

[RobRoy]

I would watch the latest Star Wars movies and, on the “Jedi” high tech planet, I would see “average people” and wonder what kind of freedom a person would have in such a world of technology.

I think we would be as free as a 1 year old in a crib, only worse. It would be like mommy was just sitting there watching all the time.

[perez24]

I carry balances on a couple of cards (I know it’s stupid but stuff happens). American Express cut my limit by 90% and then, after I paid it off, cancelled me altogether.

Now it’s their right to do that and I can live better with one less credit card, but I had never had a problem with them...or any company. If they don’t want my business or think I’m a bad risk that’s fine with me.

I just wish they’d quit sending me invitations to join under another account.

[perez24]

BTW, the balances are steadily going down now...like I said stuff happens.

[RobRoy]

I pay my amex off in full every month. I had my limit cut in half a few months ago and called. They said it was because my credit score had dropped.

On investigation I discovered that a “medical payment” account my wife opened to cover root canal work had somehow been missed one month ($54 a month payment on $1,200) it dinged my credit rating.

Naturally, the first thing I did was cut them a check for $1,200 to get that nitty bill out of the way. But I sure learned a lesson about what small things can really impact you. And since we are just buying the property in Kentucky, it mattered... :(

[Centurion2000]

Since when do they have authority to snoop and actually keep itemized records on what you're purchasing?

Just bought a gun safe .. is that going to be reported to some agency now? Crap.

[Dead Corpse]

Or, you could just be really frugal and part with your coin only when you really need to. That you appreciate a good bargain rather than buying just any old high priced crap.

meh... Other than my mortgage, I'm debt free. A pox on all their houses...

[longhorn too]

I bought three USED guns books off Amazon yesterday, I guess that will be a double whammy because they are USED and they are about those nasty guns!

[Mark was here]

This is a good thing. Those who are more likely to default should pay more. Those who play by the rules and are less likely to default should be rewarded. My only concern is that those who buy silly things should not be penalized until they actually miss a payment.

[Hattie]

Why on earth do we need personal questions in the census? Everything is already known.

[ModelBreaker]

Dang. My wife shops at Goodwill all the time. It’s one of the reasons we have good credit. We don’t overspend on stuff.