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Who will make their mortgage payments? Credit card data mining.

By Sharon Simms

Real Estate Agent with Coastal Properties Group International - Christie's International

June 07, 2009 01:24 AM

This morning our paper had a long and interesting article from Charles Duhigg, business reporter for the NY Times. He wrote an article for the New York Times Magazine on all the data mining done by/for credit card companies. So, for example, someone who charges felt pads for chair legs or a carbon monoxide detector is far more likely to pay his credit card bill than someone who charges a chrome skull car accessory.

Avoiding for the moment the privacy or ethics issues ...

Wouldn't this data also work to determine who's most likely to pay their mortgage payments? Could doing this lower the interest rate and payments for those most likely to pay their bills?

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Russell Lewis

Realty Austin, Austin Texas Real Estate - Austin, TX

Broker,CLHMS,GRI

WOW! I have always been uncomfortable wth the privacy issues but then again, it would be an interesing way to track that concept. I mean, some insurance companies already determine rates by a credit score. I don;t think that's fair but who knows. Hope you are doing well, I am having coffee after a morning run and for some miracuous reason it's still cool..in June..in TEXAS!

Jun 07, 2009 01:29 AM

Patricia Kennedy

RLAH@properties - Washington, DC

Home in the Capital

Gee! Remind me to run out and charge a carbon monoxide detector the next time I refinance or buy a new place!

Jun 07, 2009 01:31 AM

SarahGray Lamm

Allen Tate Realtors Chapel Hill, NC 919-819-8199 - Chapel Hill, NC

Realtor - 100K Hours of NC Real Estate Experience

Seems to me that your record for simply paying your credit card and utility bills is a good assessment of who will pay their mortgage! I'm sure there are some folks with chrome skulls on cars who do both! Then there is the job factor...do you have a JOB and is it in an industry likely to keep you employed? As for passing along the benes to those of us who pay through lower payments? hahahahaha I'm thinkin' that refi-ing at 4.5% already did that for some of us! Good thing I already have a mortgage in case I want to buy a chrome skull for my nephew's birthday! Scary stuff!

Jun 07, 2009 01:57 AM

Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES

Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL

Florida Waterfront and Country Club Living

Thanks for sharing, this is a very interesting article albeit just confirming what we already know: we are being manipulated at every turn!

It would be nice to think that regularly paying off your balances, whether it be credit card or mortgage debt, would lower your interest rates; however, the notices I receive from my credit card companies indicate that is not so.

On another note, I better stop charging my skull and crossbones! Have a great Sunday!

Jun 07, 2009 02:01 AM

Fernando Herboso - Associate Broker MD, & VA

Maxus Realty Group of Samson Properties - Clarksburg, MD

301-246-0001 Serving Maryland, DC and Northern VA

The improved version. ..is called a credit score. . .you pay . . you get good marks . .you don't pay . .your credit rating drops.

Jun 07, 2009 02:24 AM

Andrew Mooers | 207.532.6573

MOOERS REALTY - Houlton, ME

Northern Maine Real Estate-Aroostook County Broker

CMD...asking Santa for one. Bad credit is better it seems than no credit for the new, young starting out property buyer.

Jun 07, 2009 02:28 AM

Thom Abbott

MyMidtownMojo.com |770.713.1505 | Intown Atlanta GA Condo Living - Atlanta, GA

Midtown Atlanta GA Condos For Sale

Sharon..this is beyond scary on so many levels! I once called one of my cc companies and asked them to lower my interest rate. Their response was "You use your AMEX all the time. If you used our card, we would." Shows you how they watch everything.

Another scary part...let's say you have an investment property you have in trouble with, and let it go to foreclosure. You are still paying your credit cards on time...they can jack your interest rate and there you are....being held hostage!

So help me.....the day I get my credit cards payed off, I will be on a cash only basis....and they will not be hold a gun to my head.

Jun 07, 2009 03:35 AM

Cris Burlew

Beach & Luxury Realty, Inc. - Saint Pete Beach, FL

Broker ~ St Pete Beach FL Real Estate

Interesting article and thanks for sharing it with us. It would be interesting to see how that data could be used in determining who would pay their mortgage payments on time.

The scary part is, that there are credit card companies out there who are closing accounts on people who pay off their bill each month! Seeing someone pay their credit card bill off each month should seem to be a good indication of how they would treat their mortgage. It seems like we are in for a rough ride with the credit card companies.

Jun 07, 2009 06:40 AM

William Johnson

Retired - La Jolla, CA

Retired

Hi Sharon, that may not be scientific enough. I heard among all the other qualifiers that person qualifying for a loan must pass muster on is a lie detector test with Sodium Pentethol and a urine test to make sure they are on sedatives making them seem calm as they slightly stretch the truth to qualify. Normally I would add a smile, but I think these things may be in the works, :-)

Jun 07, 2009 04:34 PM

Troy Erickson AZ Realtor (602) 295-6807

HomeSmart - Chandler, AZ

Your Chandler, Ahwatukee, and East Valley Realtor

Sharon - It seems to me that most of the data mining and information gathering is not for the benefit of those that pay on time, but a way to increase the interest rates on everyone so the credit card companies can make even more money. If they can find a way to increase your interest rate because you work for a higher risk business, or based on what you purchase, then that has nothing to do with you personally, and whether you pay your bills on time. I think it has already gone way too far.

Jun 09, 2009 07:13 AM

Joshua Lerette

Tampa Bay Florida FHA, VA, USDA & Jumbo Mortgages - Saint Petersburg, FL

Tampa Bay's #1 Trusted Mortgage Specialist

This is wrong...on so many levels! Our credit scoring system here is already a major catastrophe and loan level price hits are right up there along with it. I have had clients with credit scores 80 points below where they usually are simply because their credit card company cut their borrowing limit to their current balance. The problem with this system is that currently credit scoring is only a snapshot of that persons credit at that specific time. It does not take into consideration what their score was just a week ago. 35% of your credit score is based off your current debt to limit ratio. When these credit card companies cut their limits to the amount owed, it instantly drops the score because it looks like the borrower is over extended. So rather than have a 780 score they have a 700 score and are charged a higher rate and fees. What sense does that make?

To think that profiling borrowers by their taste of possessions will help with credit ratings or interest rates is ludicrous. I truly can't believe that would be in the New York Times.

Thanks for sharing though. I can't believe it, but thanks for sharing.

Jun 09, 2009 08:52 AM

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Sharon Simms

St. Petersburg FL - CRS CIPS CLHMS RSPS

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