Actual credit might not be the most important thing in the World, but that is not true for your credit report and credit score. After all, credit reports and scores are used to determine so many things now, such as insurance premiums and employment. And, the point is that using your credit cards, even if you do it responsibly, to purchase certain things can harm your credit. It matters little that you pay off your credit card on time each month.
According to Treehugger, if you shop at a thrift store to save money, get your tires retreaded instead of opting for new ones, buy organic produce, and you are using your MasterCard for these purchases, you could be ruining your credit without even knowing it. And, it is the concept of these secret algorithms that are so troubling about the credit markets.
The reason is that credit monitoring agencies have programed in certain buying decisions as red flags or indications that you might be in financial trouble.
According to the Concord Monitor, credit companies watch for signs that you are becoming a less reliable person to whom to lend money. These can be charges such a using your credit card to pay a for bail bond, but they also rely on more dubious red flags such as shoe repair, making purchases at the Salvation Army. The theory of the credit card companies is that you might not be able to afford to buy new tires or clothes and therefore might not be able to pay your credit card bill.
Using your credit card at any grocery store is also evidently a sign of your financial ruin, and is noted by the agencies.
First of all, it is distressing (and has been for a long time) that these agencies have so much access to information about our daily lives. But, but what is troubling is the fact that they are making generalized assumptions about our most trivial buying habits in ways that can dramatically impact our ability to take out a home loan in the future. At one time thift and savings were the key to good credit and home ownership in this country. Now, you must be buying new stuff or you suffer for it.
Well, you might say so what. I do not buy retreated tires, or shop at the Salvation Army or thrift stores. It does not matter because if you use your credit card at a grocery store that is a mark against you as too. Which, when you think about it, is amazing. It is true that a lot of people use credit cards at the grocery stores just because they do not to accidentally run up overdrafts for failure to properly transfer enough money at from one account to another at the same bank. Whatever the reason this is just crazy.
It is crazier still that credit card companies encourage you to not carry cash and to pay for purchases with your card, they tell you not to leave home without it, and then they punish you for doing as you are asked.
It is true a new law was recently past that will eventually cut into credit companies' ability to watch your every move and make such seemingly arbitrary adjustments to your credit rating, but it won't go into full effect until 2011.
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