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Federal Agency Data-Mining Hundreds of Millions of Credit Card Accounts
An anonymous reader writes with this excerpt from the Washington Examiner: "Officials at the Consumer Financial Protection Bureau are conducting a massive, NSA-esque data-mining project collecting account information on an estimated 991 million American credit card accounts. It was also learned at a Congressional hearing Tuesday that CFPB officials are working with the Federal Housing Finance Agency on a second data-mining effort, this one focused on the 53 million residential mortgages taken out by Americans since 1998. ...Later in the hearing, [Rep. Randy Neugebauer, R-Texas] remarked that CFPB 'and NSA are in a contest of who can collect the most information,' ... although the CFPB disagreed with that statement. In previous testimony before Rep. Jeb Hensarling's panel, Antonakes said 'the combined data represents approximately 85-90 percent of outstanding card balances.' The Argus contract specifies that the company must collect 96 'data points' from each of the participating card issuers for each credit card account on a monthly basis. The 96 data points include a unique card-account identification reference number, ZIP code, monthly ending balance, borrower's income, FICO score, credit limit, monthly payment amount, and days past due. 'Would you object to getting permission from consumers, those people who you work for, before you collect and monitor their information?' Rep. Sean Duffy, R-Wis., asked Cordray. 'That would make it impossible to get the data,' Cordray replied."
> your account balances and your income, which the IRS is already required to know about.
The part about account balances is not correct. Your 1099-INT does not contain your account balances. I've worked in a bank for nearly twenty years, and other than when we get court orders, I've never heard of someone giving an account balance to the IRS. I know for a fact there's no automated way for them to get that information since I'm the only person here that could write that code. The interest is reported because you pay taxes on it, but they do not receive the balance.
> people the right to know what their FICO score is.
You're wrong again. You do not have the right to know your FICO score. Fair, Isaac, and Company has no legal requirement to tell you their score. You do have the right to a copy of your credit report, but the FICO score is something else entirely.
Unless there's an annual fee, there's no good reason to close them, so they sit in the safe.
In fact, depending on your financial situation, it may actually hurt your credit scores to close them.
Nobody knows the exact details of how the FICO algorithm works, but one significant component is your "debt-to-credit ratio." To take a simple example -- if, say, you have $4,000 in credit card debt, but a $10,000 limit, you have a credit utilization of 40%.
Technically, they do this with installment loans too (like car payments, mortgages, etc.), but as long as you don't have late payments on them, there's little chance that it will hurt you even if you still owe quite a bit.
So, the discussion is usually mostly around revolving credit, which for most people is credit cards. From people who have tried to figure out the FICO algorithm (as much as possible), it seems clear that it's generally a bad idea to hold more than 25 to 30% of the credit limit on any given credit card.
But this also applies to your collective available credit limit as well, which is where those extra cards can come in. Keep in mind that even if you pay off your balances every month, the statement balances still generally show up on your credit report -- so if you charge $5,000 every month but pay it off, it still looks like you're carrying roughly a $5,000 balance.
And if you only have $10,000 in revolving credit, that looks bad (50% credit utilization). But if you have a few other cards laying around that you never use, and your total limit is more like $50,000 or $100,000, that looks very good.
Important points: (1) This isn't going to make or break your credit score for most people, but if the debt-to-credit ratio is really off, it could hurt it by 50 points or more. So, (2) Think twice before cancelling any high-limit cards, if you don't have a lot of credit in general. There's no good reason to hold onto a store card with a $500 limit for most people, but getting rid of that $25,000 limit card you never use could actually make a dent in your credit score, depending on the rest of your finances.