ASK KIM


Your Card Issuer Spies on You

Kimberly Lankford

Some companies check your credit report frequently so that they can raise your rate if you're late on another card.



I recently received my credit report and was astonished to find that my ATT Universal MasterCard had 21 account-review inquiries from the card issuer, almost monthly for two years. I have had this card since 1991 without late payments or credit problems. Is this number of inquiries unusual? Will it affect my credit score?

Make room for Big Brother. It's common practice for card issuers -- in your case, Citibank -- to keep tabs on their account holders every month. "We use the information to increase or decrease a credit line, or to make customers a balance-transfer offer," says Citigroup spokesman Samuel Wang.

But the motives of card issuers aren't always so benign. Some check your report frequently so that they can raise your interest rate if you're late with a payment on another card, a practice called universal default. Citibank called a halt to universal default in March, just before congressional hearings in which senators grilled bank executives about credit-card fees. But Citibank will still review your credit record when adjusting your credit limits and other terms.

The good news is that those account reviews won't affect your credit score. When prospective lenders pull your credit report, they see a version that's limited to inquiries made when you actually apply for a loan, a mortgage or other credit. Those applications can affect your credit score if it looks as if you're taking on too many new obligations.

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When you check your own credit report, you'll see many other types of inquiries, such as account reviews by your lenders, potential employers and even yourself. But those inquiries don't affect your credit score, either.

For more information about credit reports and credit scores, see Demystifying Your Credit Score.

Got a question? Ask Kim at askkim@kiplinger.com.




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