Credit card companies will start estimating your income

[spinbaby]

From an article in the WSJ:

You may think your income is private information. But the credit bureaus may have your number.

And starting in February, your income—as estimated by the bureaus—may be used to help determine whether you get a new credit card.

Tuesday, the Federal Reserve issued its final rules related to last year's Credit Card Act, which, among other things, will require credit-card companies to consider an applicant's income or assets and current debts before approving credit. To provide flexibility, however, the Fed said that issuers can use "a reasonable estimate" of income or assets based on "statistically sound models."

In hopes of such a decision, the three big credit bureaus have been updating or rolling out products that seek to estimate consumers' incomes, based on information in their credit reports, such as the size and age of their mortgages or the size of their credit limits.

http://online.wsj.com/article/SB10001424052748703672104574654211904801106.html

[phantom power]

1. Sounds like an OK idea to me.

I've been saying for a while that the process of obtaining a credit card ought to be more like the process of obtaining a mortgage.

[spinbaby]

2. It probably depends on how they go about it

Basing income estimates on the size of a mortgage seems like asking for trouble.

[phantom power]

3. Hmm. Yes, that could become... self referential.

[naaman fletcher]

4. yes and no...

In theory this is a good thing, the better they can price risks.. the better for everyone.

In reality that credit card companies are terrible and evil fuckers. I have this 2nd hand knowledge from a family member who worked in the internal consulting unit of one of the major issuers. This family member is a right winger, too. This family member said it is pure, pure, evil. All they do is work on models on how to screw everybody by changing billing cycles, picking up the mail later, etc. He/She quit in short order, and still raves about how evil they are.

Reform ought to consist of uniform billing policies, payment cycles, mail pickup times, etc.

the only prices that change are the stated interest rate, and the annual fee.

Let the CC companies compete on those two prices alone, and of course their internal ability to judge who to extend credit to and how much to extend.