@plasticguy wrote:
What a person buys and where they buy it could have a devastating effect on a credit score, a News investigation revealed.
The investigation found credit companies may be looking at where a cardholder is shopping and determine an interest rate from there.
It's not just any day at the Salvation Army thrift store. It's Wacky Wednesday, which means all clothing and furniture is half price.
Something else that is wacky is that every time a customer pays in a thrift store or consignment shop or other discount store with a credit card, the credit card company may know about it, and some will use the information to punish the cardholder.
A government probe revealed some credit card companies have been tracking purchases in bargain stores to determine if customers may be in financial trouble and pose a credit risk.
That means shoppers like Kelly Mawhinney, who likes to pick up used clothing for her family, could have her credit limit capped, interest rate raised or suffer a bad credit score.
"I think that's ridiculous. I mean we're all just being conservative about our spending, and I'm being conservative in the sense that I like to buy used things and reused things instead of buying brand new," Mawhinney said.
A great deal on jeans didn't sit well with Alisha Sumner when she learned her credit card purchase could hurt her credit score.
"I should be able to buy whatever I want whenever I want, and nobody should track that. Nobody should track that but my husband and I," Sumner said.
"The demand is up, but the donations are down," Salvation Army Maj. Jim Smith said.
The Salvation Army said card issuers have no business preying on their customers.
"It's discriminatory to me ... These people are going to be suffering on both ends. Their dollar isn't going to be worth as much," Smith said.
"No. I don't think that's right," Rep. Suzanne Kosmas, D-Fla., said.
Kosmas said a new credit card law signed by President Barack Obama in May will help crack down on banks.
"Some of their practices were inappropriate, and now we've made them illegal," Kosmas said.
In the short term, consumer credit counselors said cardholders should ease up on credit purchases.
"Cash certainly is one way to get around having the eye of the creditor looking over your shoulder all the time," Consumer Credit Counseling Service spokesman Richard Schram said.
This article is potentially misleading.
Use of a card at any location cannot, in itself, affect your credit score. FICO doesn't know where you shopped, only the CCC does and they do not create the scores. However, if the CCC decides to close the account or decrease the credit limit, which increases the percentage of utilization, this can affect FICO scores.
Also, if a cardholder usually shops the GAP, Macy's, Dillards (the mall in general) but suddenly starts shopping secondary stores, this does potentially imply a flag on financial distress.
A cardholder is not entitled to credit indefinitely. The CCC may determine it wishes to discontinue extending credit at basically anytime. That is the nature of revolving credit. To "outlaw" this will have many unintended and detrimental consequences.
There is nothing inherently evil about tracking purchase "habits" and trends when the CCC uses this to look for potential fraud and for potential signs of financial distress. CCC's are not in the business of funding financial hardships. They are in the business to make purchase transactions and to collect interest on balances to "qualified" and "financially worthy" customers.
Credit is not a right. It is a business arrangement with terms and conditions (strings) attached.
