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Credit Risk Now Has a Favorite Store: Is Where You Shop Indicative of Credit-Worthiness?

Credit Risk Now Has a Favorite Store: Is Where You Shop Indicative of Credit-Worthiness?

Add this to the ever-increasing pile of reasons why you should stop using credit cards. As if to mirror the Big Brother environment of post-Patriot Act America, credit card companies have started profiling people based upon not just how much they spend and how well they pay their bills, but where they use their credit cards. A profile that theoretically allows credit card companies to gauge the likelihood of their customers defaulting on their credit balances has been developed that comments upon credit cardholders spending patterns, including what stores they frequent, in order to determine their presumed risk as customers.

The big story that has been passing around the net and on TV is concerning American Express and one of their purportedly good customers, a guy named Kevin Johnson, who had his American Express card spending limit lowered by $7,000. When he asked American Express why his limit was lowered, given that he pays his card in full every month and maintains a FICO score well over 700, American Express explained that they had a poor repayment history with some of the merchants that he had been frequenting of late.

So not only does your own behavior affect your credit, the behavior of other customers who shop at the same stores as you do is now going to affect you! Better start shopping at places where people always pay their bills. Like . . . . uh, well–yeah, I’m not sure where that would be. Seems to me that there are deadbeats everywhere, and given the Madoff Ponzi scheme, this includes the high rollers at Gucci and Smythson of Bond Street, even.

Is the banking and credit industry finally ready to just admit what we have always suspected, viz. that they don’t know what the fuck they are doing, and are looking for anything they can find to help reduce risk on their ventures which are, at heart, basically high-stakes gambling ventures? You know who I think they should start consulting, that dude they based the movie Casino on, the bookmaker? I think he lives somewhere in the OC now–he seems to be much better at this stuff than you guys.

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