Is Your Bank Spying on You?

[marmar]

via AlterNet:




Raw Story / By Daniel Tencer

Is Your Bank Spying on You?
Banks and credit agencies are becoming ever more intrusive in their efforts to gauge exactly what you're worth, and what you can pay.

November 7, 2010 |


The age of the plain old credit score is gone, says a report at the Wall Street Journal, and it's been replaced by ever more intrusive efforts by banks and credit agencies to gauge exactly what you're worth, and what you can pay.

To that end, financial firms are now tracking their customers' bank deposits, rent payments or home values, and even utility bills to figure out who may soon become a financial risk, reports WSJ's Karen Blumenthal.

So, for example, if your employer pays you through direct deposits and those deposits stop, financial institutions can now have warning that your money situation is likely to tighten, and may deny you credit on that basis.

But the efforts don't end there. A new area of research, income estimation, "took off earlier this year," WSJ reports, and involves financial firms collecting information about mortgages, personal loans and credit history to determine how much an individual makes and how much credit they should be given.

In this new era of deep data-mining, even your utility bills and rent check aren't out of bounds.

An estimated 40 million consumers, including young people and people who prefer to pay in cash, have too little credit experience to generate a useful credit score. But they are likely to pay rent or utility bills, which could help credit bureaus better assess their credit-worthiness. ...........(more)

The complete piece is at: http://www.alternet.org/story/148765/is_your_bank_spying_on_you/

[xchrom]

1. privacy is a thing of the past -- and you -- you are your credit score. nt

[HopeHoops]

2. No way. I was just on the web site - wait, what's that? AAARGHH! BLACK SUV'S, HELICOPTERS!

AAAARRGGHHH!!!

On a more serious note: if you buy beer, wine, or liquor, always pay cash. Yes, that information can be used against you if you pay by credit or debit card - even if you are only a casual drinker.

[melm00se]

3. this is a prime example of...

be careful what you sign.

credit applications routinely grant the lender the ability to investigate the creditworthiness of the borrower and builds language in to allow for more than just a credit bureau and employment check.

Furthermore, lending contracts (especially ones for revolving lines of credit) also include language that allows the lender to reinvestigate the borrower on a periodic basis (it's can "re-underwriting" the loan) and this includes not only credit bureau checks but also, in the case of real estate secured loans/accounts, getting updated property values.

This re-evaluation may not include a specific visit by an appraiser to a specific property but rather a statistical modeling of a zip code, a section of a city or the complete MSA to determine the general trend (up or down) of properties and apply that to the last known value/appraisal of the property.

The real KITA is if the lender says that you property value no longer has sufficient equity yo keep the line open and you disagree. You then have to have a full appraisal done on your coin which the lender may or may not accept the valuation.

(BTW, not only is it credit applications but also job applications, rental apps, insurance apps etc all have similar language).

[MineralMan]

4. If there's one thing we all should have learned in recent years,

it is that it's unwise to use the equity in your home or other real property as a checkbook. One of the very best ways to keep your credit score high is to maintain a substantial equity in your home. Borrowing against that equity is not smart management of your resources. Instead, do all you can to increase that equity, with the goal of it being 100% of the value of your home. That's smart use of credit.

[melm00se]

5. unless it's

primary housing debt (translation: 1st mortgage), secondary housing debt falls into the same category as credit card debt...IOW: bad/unhealthy debt.

[MineralMan]

6. Right. I was referring to secondary debt only.