Great Credit Score: Want to Buy a Diamond Necklace?
By: Donna Ray Berkelhammer. This was posted Monday, July 6th, 2009
I just read this article on how Google will use your credit score to show you targeted ads when you use its search engine. Apparently, in some credit card applications, you can allow your credit score to be given out to marketers, just like your name, address and email address.
For those who don’t know, credit scores are a number from 300-850 that are used to evaluate someone’s credit-worthiness. While credit scores are used to determine IF someone can obtain a loan, they are also used to determine the RATES. People with low credit scores pay higher interest on loans and higher insurance premiums.
And now, you may be marketed luxury items if your credit score is high. So far this program is opt-in, but I wouldn’t be surprised if the questions are hard to read or if at some point you have to opt-out.
The exact scoring system for determining a credit score is a proprietary secret of the Fair Issac Corporation (FICO), but there are 5 general categories, each weighted differently, that determine your score:
- 35% Payment History: Do you pay your bills on time?
- 30% Utilization: How much are you using of all your available credit?
- 15% Credit History: How long you’ve held your accounts, how recently have you used them?
- 10% New Credit: How many accounts have you opened recently vs. your total number of accounts? How many recent credit inquires have lenders made?
- 10% Types Of Credit: What kind of credit do you have?
The information is based on your credit history on record with Experian, TransUnion and/or EquiFax. To raise your credit score, you want to pay your bills on time, have long-standing credit accounts, and use a small percentage of your available credit. Paying off revolving debt (credit cards) routinely counts for more than paying a mortgage routinely.
Of course, having an accurate credit history is also important, and that is something I will discuss another day.
But back to my original thought: Does marketing to people based on credit scores creep you out as much as it does me?