Six things you should never charge: Credit profiling

By Aaron Gilchrist - bio | email
Posted by Terry Alexander - email

RICHMOND, VA (WWBT) - If you have a penchant for purchasing with plastic, you better believe your credit card issuer is keeping an eye on you. Credit profiling is nothing new. The industry used to do it for marketing purposes to customize offers to cardholders but with the economy sputtering along, card companies are trying to cover their assets.

"They're using that to determine what kind of a risk you present, in terms of whether or not you're going to pay back timely or whether you're getting yourself into financial trouble," said Bruce McClary, ClearPoint Credit Counseling Solutions.

So what makes you riskier than others? Robert Manning, author of Credit Card Nation, says there are six things you should never, ever charge on plastic. First - traffic tickets.

"That might indicate, not only a future inability to repay some of your debt, especially if incarceration is on the horizon, but also it's not a very wise choice to be doing that because these are things that are typically interest free," said McClary.

While most cards offer it, experts say you should avoid credit card cash advances.

"That shows that you've already likely tapped out your actual cash reserves in your savings and you're turning to the credit card company to get cash in hand," he said.

If you like to play the slots, or the scratchers, or try your hand at the lotto - pay with cash.

"That's gambling. And you're taking your money and you're not making wise choices with your money," McClary said.

Bad idea number four - Alcohol. Now, it's not so odd to charge it when you stop at the ABC store, but all things in moderation.

"It's all about the change in the pattern. And if that increases to a level where it's daily or multiple times a day, that could interfere obviously with your finances," he said.

Five - If you've developed an appreciation for performances of the exotic sort, or charge your trips to triple-x websites, creditors see you as risqué.

"The frequency of that how often it's done and if it's done on a regular basis increasingly, that could get someone in financial trouble and it can impede their ability to repay the creditor," said McClary.

The last one is a bit odd. If you used to do all your shopping at Ukrop's and Macy's and now you stock up at Walmart, creditors might make some changes.

"That is an indication that something in your financial circumstances has changed to the point where you've had to make a drastic shift in your lifestyle," he said.

McClary says the key is not using your credit card excessively or unnecessarily. If your card limit is lowered, that could also lower your credit score.

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