10 things credit bureaus won’t say

1. “We track a lot more than just your credit.”

Credit bureaus are well known for tracking consumers’ credit history, including tabulating such details as whether they pay their bills on time and how much debt they carry. And as evidenced by the recent case of Julie Miller, who was awarded $18 million after she sued Equifax — one of the three main credit reporting bureaus — for failing to correct major mistakes in her credit report, the information they compile can sometimes be riddled with errors.

But the bureaus also maintain information that has nothing to do with credit, from consumers’ home addresses to their employment records. While that data isn’t used to calculate credit scores, lenders can access this personal information and use it to help evaluate borrowers who are applying for credit — even to justify denying them a loan altogether. Individuals who change addresses often, for instance, may be presumed less financially stable and harder to track down if unpaid debts ever need to be collected, says Louis Hyman, a consumer-credit historian and assistant professor at Cornell University. Similarly, those who change jobs every few months could be viewed as more likely to miss payments, he says. Read more >>

Your personal info traded for pennies

Corporate competition to accumulate information about consumers is intensifying even as concerns about government surveillance grow, pushing down the market price for intimate personal details to fractions of a cent.

Over recent years, the surveillance of consumers has developed into a multibillion-dollar industry conducted by largely unregulated companies that obtain information by scouring web searches, social networks, purchase histories and public records, among other sources.

The resulting dossiers include thousands of details about individuals, including personal ailments, credit scores and even due dates for pregnant women. Companies feed the details into algorithms to determine how to predict and influence consumer behaviour.

Basic age, gender and location information sells for as little as $0.0005 per person, or $0.50 per thousand people, according to price details seen by the Financial Times. Information about people believed to be “influential” within their social networks sells for $0.00075, or $0.75 per thousand people. Slightly more valuable are income details and shopping histories, which both sell for $0.001.

According to industry sources, most people’s profile information sells for less than a dollar in total. “You’re not worth much,” said Dave Morgan, founder of one of the first companies to use web surfing data to target online ads. Read more >>

10 States That Are Maxxed Out on Credit Cards

Finance.yahoo.com


Here are the top 10 states with the highest bankcard utilization ratios.

10. Louisiana
Average Balance: $3,503
Average Limit: $16,257
Average Utilization: 21.55%

Louisiana comes in last on our list, with a decently low average balance per consumer. The Bayou state could benefit from asking their credit card issuers to up their limits though — a tactic that can lower your utilization without forcing you to cut spending.

9. Texas
Average Balance: $4,072
Average Limit: $18,857
Average Utilization: 21.59%

The saying goes that “everything’s bigger in Texas” and that must be true of the state’s credit cards too, as the Lone Star state has the highest average limit of all of the states on our list. The high credit limit doesn’t mean that Texans aren’t spending though, as they also have the third highest balance.

8. South Carolina
Average Balance: $3,786
Average Limit: $17,351
Average Utilization: 21.82%

7. Oklahoma
Average Balance: $3,579
Average Limit: $16,396
Average Utilization: 21.83%

6. Arkansas
Average Balance: $3,469
Average Limit: $15,751
Average Utilization: 22.02%

Arkansas takes the prize for lowest average balance of any state that made our list. Perhaps residents of the Natural state could use a new credit card, which can add to their overall limit and decrease their utilization ratio.

5. Nevada
Average Balance: $3,999
Average Limit: $18,047
Average Utilization: 22.16%

4. Alabama
Average Balance: $3,618
Average Limit: $16,085
Average Utilization: 22.49%

3. Georgia
Average Balance: $4,246
Average Limit: $18,520
Average Utilization: 22.93%

Though Texas took the highest average limit of all the states on our list, Georgia wasn’t far behind. The state could try to skim more money off their monthly expenses to cut their utilization ratio.

2. Mississippi
Average Balance: $3,384
Average Limit: $14,644
Average Utilization: 23.11%

Though this state comes in second in our rankings, its residents aren’t charging more dollars, on average, than any other state on our list. The high utilization ratio in Mississippi is due primarily to the fact that its average limit per consumer is very low.

1. Alaska
Average Balance: $4,563
Average Limit: $16,453
Average Utilization: 27.73%

While all of the other states in our rankings stayed below a 25% utilization ratio, Alaska broke that barrier. This should come as no surprise to those who pay attention to Alaskans’ personal finances. The 49th state has recently topped lists of the highest credit card balances and highest revolving account debt. Read more >>

1 in 10 Unemployed Denied Jobs Due to Credit Checks

Employer credit checks are preventing the nation's hardest hit job seekers from entering the workforce, a new study shows.

One in four unemployed Americans have been required to go through a credit check when applying for a job, and one in ten have been denied jobs due to information in their credit report, according to a survey by liberal think-tank Demos of about 1,000 low- and middle-income households with credit card debt.

"Employer credit checks are common and they're keeping people from getting jobs," said Amy Traub, Demos senior policy analyst and author of the report.

While people tend to think credit checks are only conducted for senior level positions, the study found they are often used for entry-level, low-paying positions as well -- even for jobs like delivery drivers and frozen yogurt servers.

Bad credit is often a result of unemployment and the loss of health insurance, which makes it difficult for people to keep up with the bills, Demos found. Another common cause of poor credit is medical debt, which only gets harder to manage when compounded by unemployment. Read more >>

Credit Bureaus to Include Your Income on Credit Report

KAREN BLUMENTHAL
Look Who's Peeking at Your Paycheck
You may think your income is private information. But the credit bureaus may have your number.

And starting in February, your income—as estimated by the bureaus—may be used to help determine whether you get a new credit card.

Tuesday, the Federal Reserve issued its final rules related to last year's Credit Card Act, which, among other things, will require credit-card companies to consider an applicant's income or assets and current debts before approving credit. To provide flexibility, however, the Fed said that issuers can use "a reasonable estimate" of income or assets based on "statistically sound models."

In hopes of such a decision, the three big credit bureaus have been updating or rolling out products that seek to estimate consumers' incomes, based on information in their credit reports, such as the size and age of their mortgages or the size of their credit limits.

The products also are responding to banks' efforts to tighten credit standards in order to reduce losses and risk. "We look to fill in the blanks where they need the blanks filled in," says John Cullerton, vice president, product management, for Equifax Inc., an Atlanta-based credit bureau.

Credit-card companies can then double-check what we have long reported ourselves against these estimates—which often don't require consumer consent and aren't available to consumers for review.

Indeed, lenders of all kinds are starting to collect ever more financial information from us and about us. Last summer, Fannie Mae began requiring mortgage lenders to verify borrowers' incomes by checking income-tax filings. Instead of simply providing pay stubs and bank and brokerage account statements, home buyers now are being asked to provide copies of their tax returns and are also required to fill out an Internal Revenue Service form known as 4506-T that allows the IRS to release their tax filings to lenders.

Credit scores, which have been long a key factor in whether you get a loan or a credit card, may not be sufficient for many future credit decisions. With the new credit-card law requiring credit-card issuers to consider a customer's ability to pay before opening new accounts, the Fed had proposed requiring people to report their own income or assets when applying for credit.

But retailers feared the proposed rules would squelch their ability to instantly open credit accounts at the cash register because shoppers wouldn't want to disclose such personal information in the middle of a store. Both retailers and the credit bureaus asked the Fed to allow them use alternatives such as the credit bureaus' income estimations instead.

Card companies already are asking for more detailed information in their online applications. Capital One is asking applicants to disclose how much they pay in mortgage or rent payments, how much they have in bank accounts and how much is in their investment accounts. Bank of America and Chase are requiring household income estimates.

In the past, the companies relied on self-reported income information. But lenders already are starting to use Experian PLC's Income Insight product to verify what individuals report, says Brannan Johnston, vice president, income and deposits for the Costa Mesa, Calif., credit bureau.

Experian came up with its estimates by matching credit reports against a deep database of wages and interest and investment income and determining what information about the number of accounts, total credit, payments and other factors best predicted income.

Mr. Johnston says the income estimates also may be used to decide whether to increase a credit limit, since information on credit-card accounts may not be available or up-to-date. In addition, collection agencies have been interested in using the data to determine the most profitable accounts to pursue.

TransUnion LLC, a Chicago-based credit bureau, says most uses of its updated income estimates so far have been used for marketing pre-approved credit cards or other consumer offers, though lenders are also interested in the opportunity to calculate a debt-to-income ratio to see how extended a potential borrower might be.

Experian estimates income to the nearest thousand, while TransUnion offers a range. But both acknowledge the estimates are just that. Experian says that more than 85% of the incomes it estimates at about $35,000 will indeed be below $50,000—but that's hardly precise. Chet Wiermanski, global chief scientist at TransUnion, said it isn't uncommon for estimates to be off by $15,000 or $20,000.

Because the bureaus' numbers aren't exact, the companies say their contracts prohibit lenders and credit-card issuers from turning down customers based solely on the information. The estimates may, however, prompt a request for more details from borrowers, like pay stubs or tax returns.

Equifax, through its Work Number business, also provides employment verification and payroll data collected electronically from about 2,000 employers. Lenders, potential lenders, insurers and debt collectors can access the information without getting an individual's specific consent if they're using it for permissible purposes under credit laws. More...