Here’s an interesting article, regardless of how or if you use your credit cards:
“What Not to Buy on Credit”
Thinking about playing a little eight ball on your way home from work? Don’t use plastic. Some major credit-card issuers, including American Express, now factor in where people use their cards when making decision to cancel credit lines or slash spending limits. “Studies have found that consumers who frequent certain types of businesses post an increased credit risk,” explains AmEx spokesperson Kim Forde.
Which businesses exactly? AmEx won’t say. But a lawsuit over a similar scoring model, filed by the Federal Trade Commission against subprime issuer CompuCredit earlier this year, may offer some clues. The suit claims that CompuCredit dinged cardholders for using eight kinds of vendors, among them bars, massage parlors, billiard halls, nightclubs and marriage counselors(!)
This article reminded me that many insurance companies are now using an individual’s FICO score to help determine that person’s premium. I’m sure many people find tactics like these to be invasive at best, creepy at worst. But if I were AmEx, I would do the same. It’s good business to look at all the available information before making your final decision.
Horowitz, A. (2008, December). What Not to Buy on Credit. Money, 20.
