The Federal Trade Commission currently has a lawsuit filed against credit card issuer CompuCredit (CCRT). It’s not about them raising rates because you forgot to make a payment, or because you went over your credit limit.
ComputCredit has been using lifestyle, in part, to determine rates. If you shop at certain types of establishments – a massage parlor, retreading a tire, or visiting a marriage counselor – they raise your rates.
But that’s not even why the FTC filed suit. They filed the suit because CompuCredit didn’t tell you about it ahead of time.
Of course that part is disturbing, but to me the more disturbing part is that my behavior – not just my payment history – can affect the rate I pay for credit. I can conceivably be charged a higher rate based on criteria I don’t even know exists, so there’s nothing I can do to improve it.
I guess I’m making some “credit-friendly” choices, since my score is in the top 1% in the nation. At least it is now. But if this type of behavior-leads-to-risk analysis gets more specific, more in-depth, I could conceivably see my score and my rates plummet despite my excellent payment history.
A disturbing trend indeed.
Are You Going To Be This Way The Rest of The Time I Know You? 
July 3, 2008 at 11:02 pm
This is truly alarming: confirms the suspicions of privacy-obsessed paranoiacs like me. I heard about this a day or so ago on NPR.
Big Brother is watching you…and he ain’t the gummint.
July 4, 2008 at 12:46 pm
A reporter on NPR did a piece on credit card rates this week, and one of the things mentioned was that if you use your credit card to buy the necessary stuff – groceries was mentioned specifically – that companies might raise rates because it looks like you can’t pay for it any other way. I pay my card off every two weeks, but I use it for all my gas, and grocery purchases – not to mention I pay my bills with it. I do all that so I can get my Amazon reward checks faster, and since I pay it off every pay day, I never pay interest. But if I ever needed to carry a balance, my thriftiness could come back to haunt me. Which is just sad.
August 18, 2008 at 1:18 am
[…] This Way brings up a topic I recently heard discussed on NPR: the practice of gathering information about your lifestyle based on your purchasing habits, and then using it to determine your credit card rates. Whatever […]