Profiled By Your Credit Card Company?

January 30, 2009

If someone were to look at your recent credit card statement what kind of judgments and assumptions could they make?

Spending habits, products and services you buy, even the places where you like to shop can reveal a lot about you. Most people don’t think much of it – but credit card companies have always been paying attention.

Traditionally card companies used a customer’s purchasing history to flag suspicious transactions and intercept fraud. For example a large transaction at a casino might set off red flags if a consumer lives on the East Coast and never gambles.

Now credit card companies – seemingly without warning – have changed the rules and started using this information in a much more insulting and unethical way. Would you be surprised to see your credit limit drastically reduced just because you used your American Express to charge something at Wal-Mart?

That’s just what happened to Kevin Johnson, 29, of Atlanta. He recently returned from a trip to find his new American Express Blue card’s credit limit slashed from $10,800 to $3,800. The explanation?

Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.

“I think offended is an understatement,” Johnson said of his reaction. “It was more like completely disgusted, offended, appalled. And I didn’t even know what to do.”

Behavioral Scoring is what it’s called in the industry and it is becoming more and more widely adopted by credit card companies. If this practice continues, consumers hit by foreclosures, job loss, and hardship by the recession will be greatly affected when they shop at discount stores trying to save money… only to find out they’re hurting their already troubled credit.

Johnson hopes he can make a difference by helping consumers be aware of these types of practices by credit card companies. He’s setup a website called NewCreditRules.com. You can read more about Kevin’s story at ABC News.