Your Credit History Is More Revealing Than You Think

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The information in your credit report has long been used to predict how likely you are to pay credit card bills on time or remain current on your mortgage. But now credit information companies say they can figure out everything from how much discretionary income you have to how likely you’ll be to take medication as prescribed. It’s the next logical step for companies intent on finding new and lucrative ways to sell your personal data to marketers — but it’s also kind of creepy. 

“Any time companies collect information and put it in databases to make decisions about consumers, there is a privacy question,” Ed Mierzwinski, consumer advocate at US-PIRG, says via email. He urges financial regulators to take a harder look at some of these strange new scores.

(MORE: 5 Things You Don’t Know About Your Credit Score)

Credit bureau Equifax offers a product called a “discretionary spending index” that’s designed to help marketers ferret out consumers who have some extra money with which they could be persuaded to part. The 1,000-point scale “enables marketers to rank customers and prospects by spending power,” the company’s website says.

With this information, companies know which customers are the best candidates to target for marketing opportunities.

The webpage for the index also says it can tease out how much money low- and middle-income households have to spare. This could be a boon to bill collectors, since they would know which customers legitimately don’t have enough money to pay their debts versus those who just say they can’t pay up. A related product, the “ability to pay index,” makes similar claims. “[A] leading collections firm was able to identify over $14 million in collections, representing close to 40% of all outstanding balances from just 21% of delinquent accounts,” a testimonial on the site says.

Equifax and rival credit bureau Experian both offer products that claim to offer detailed information about a person’s income, including wages along with other income streams like investments. As with the discretionary spending index, this would give marketers a lot more insight into which consumers are worth the resources to pursue, and which ones aren’t as valuable.

The Wall Street Journal describes how Fair Isaac Co. — the company behind the ubiquitous FICO score — has developed what it calls a “medication adherence score” designed to tell doctors which patients are most and least likely to follow the directions on their prescriptions. The marketing materials on FICO’s website promise that with only a name and address, and either a healthcare company’s own records or “publicly available third-party data,” the company can predict whether or not a patient will take medication as directed.

(MORE: Now Credit Card Companies Want Your DNA)

“FICO has unlocked the predictive power of other data sources, such as retail purchase behavior, geo-credit profiles and income/wealth indicators,” the site says. Your shopping habits might seem like a strange thing to evaluate in connection with your health, but the Journal says seemingly unrelated factors like whether or not the person has a car or a spouse are factored into the analysis.

In the Journal, creators of these developments defend them. “[T]hey say credit-based scores increase economic efficiency, improving people’s access to loans and cheaper insurance,” the article says. But they also claim that these alternative yardsticks for measuring everything from how much extra cash people have at the end of the month to how much they earn in investment income don’t fall under all of the regulations that pertain to regular credit scores.

But PIRG’s Mierzwinski disagrees. “We … expect both the FTC and the CFPB to take a hard look at these new databases to determine whether consumers have full Fair Credit Reporting Act rights when this information is collected or sold,” he says. “We think they do.”

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