Did you know credit card companies are increasingly monitoring not just how much you are spending but what exactly you are buying?
According to “Your Lifestyle May Hurt Credit Score” on Yahoo! Finance, some credit card companies consider purchasing behavior, not just payment history, when deciding how much to lend and at what interest rates.
As part of a lawsuit regarding proper disclosures, “the FTC claims that CompuCredit didn’t properly disclose that it monitored spending and cut credit lines if consumers used their cards at certain places. Among them: tire and retreading shops, massage parlors, bars, billiard halls and marriage counseling offices.”
“The company touted that cardholders could use their credit cards anywhere,” says J. Reilly Dolan, assistant director for financial practices at the FTC. “What they didn’t say was that you could be punished for specific kinds of purchases.”
Experts say that with increased competition and advances in technology, companies accross the industry are adding all sorts of behavioral data to their scoring models. “We as consumers should become aware that behavior is used to determine our creditworthiness,” says consumer advocate Karen Gross, president of Southern Vermont College.
More from Meg at The World of Wealth