Your credit card spending may have a bigger impact on your revolving accounts than you might think. Indeed, some credit card issuers and others have admitted that your spending habits may be influencing what happens to your credit card interest rate, or to your credit limits. Of course, the Credit CARD Act passed last year provides some protection against these practices, but even the fact that the issue has come up in recent years offers a troubling look at the state of financial privacy in our society.
Indeed, your financial habits may go beyond your credit score to include other aspects of your finances. Some credit card issuers have already dabbled in looking at where you spend your money — and what you spend it on — to help identify higher risk customers. Now there are some other practices that could be coming into play.
A recent Wall Street Journal article looks at some of the new ways that financial information, not necessarily related to your credit payment history, could start affect loans, from credit cards to new car financing. The list of things that financial service providers might start including might encompass:
- Type of mortgage you have.
- How much of your wealth is liquid.
- An estimate income based on a credit bureau calculation.
- Your home’s value.
Some lenders are already trying out the idea of using Facebook and other social media posts to monitor your financial exploits, determining what kind of risk you might be by what you say about money — and even looking at what your friends have been doing with their money.
Technology makes it easy to collect and compile this data into something that lenders can use. New financial scores are being developed all the time to incorporate a wide range of financial behaviors, moving beyond the traditional FICO score. In the future, if you want to qualify for that 0% credit card, you might have to make sure that your bank account is full, you have the “right” home mortgage and that you haven’t been tweeting about the money you just blew at the casino.