In a time when banks are receiving bailout money to alleviate economic woes...once again, Mainstreet residents are paying the price.
In an article posted on ABC's Good Morning America website http://abcnews.go.com/... more is uncovered regarding how credit card holders are being targeted in unsuspected ways that will hurt credit scores and further cripple the economic recovery.
A new policy being used by at least one major credit card company judges a shopper not necessarily by his credit purchases and payments alone, but also by the fiscal behavior of the fellow shoppers in the stores he visits.
This article details how credit card companies are now able to mine data that can be used in "behavioral profiling" to determining shopping patterns that may indicate that a card holder could be in "financial distress."
For example, shopping at Wal Mart may put you into a data pool with customers who are poor credit risks, thereby damaging your own credit rating.
'Behavioral Scoring'
Manning, the author of the book "Credit Card Nation," says Johnson was the victim of a relatively new credit scoring process being used by credit card companies.
"They are saying, 'We don't like the behavior of other people that are shopping in stores that you are currently conducting business. Therefore, that raises questions about your ability to repay the loan.'"
Manning says the process -- called "behavioral analysis" or "behavioral scoring" -- is a new twist on the same type of data analysis credit card companies previously used to prevent fraud.
The economy has ground to a halt. Banks are receiving bail-out money. Consumers are having to pay for the golden parachutes. Who is going to bail out the average American Taxpayer?
'They Changed the Rules...Without Telling [Anyone]'
Johnson says he wants to help others learn more about protecting their credit. He created a Web site called NewCreditRules.com and plans to update it regularly with news about the credit card industry.
While behavioral analysis may be seeing increasing use, it is only beginning to draw scrutiny from regulators and lawmakers. In a lawsuit filed in 2008, the Federal Trade Commission cited Compucredit, a third-party credit card issuer, for failing to disclose to customers the use of behavioral scoring.
Congress needs to take a look at the entire credit industry. We have gone from the multitudinous offers of 0% interest to lure us into a false sense of creditworthiness to loan-shark interest rates that are now legal and are putting many Americans in a position of severe financial struggle.