Your credit score is not the only number card issuers and other
financial marketers use to size you up.
Marketers also have access to hundreds of alternative scores
that rely on sensitive personal details -- such as what you tweet,
how much you make and where you stop for your morning coffee -- to
predict how you will behave. Want to see yours, as you can a credit
score? Too bad. They're secret.
Some companies use these predictive scores to verify your
identity and root out fraud. Others use them for marketing, to
determine the ads and prices you see online.
Proponents say crunching such data benefits consumers because
financial marketers can use the information to customize offers
according to a shopper's needs.
"You are getting offers that relate to you," says Patrick Dolan,
executive vice president at the Interactive Advertising Bureau.
"That's what's great about advertising. It gives you information
about things you may want."
For example, if you are a frequent traveler, you may see an
offer for a hotel rewards card from the same chain you stayed with
on your last trip.
Marketers may even offer you substantial discounts on products
you were already considering buying online, he says.
However, critics say the process of generating alternative
predictive scores is creating an unregulated parallel universe to
traditional credit scores. Both types of scores are used to
determine the offers consumers get and the prices they pay. But
while consumers may view traditional credit reports and have the
right under federal law to demand corrections, predictive scores
are private. Consumers cannot see their predictive scores or
challenge any flaws.
Why predictive scores are created
The companies that produce predictive scores do not publicize the
scores or what goes into them. But consumer advocates are digging
deeper to learn more.
The nonprofit group the World Privacy Forum published a
in April 2014 examining consumer scores used for various purposes.
The group confirmed there are at least hundreds of such scores in
existence -- and likely many more.
According to Pam Dixon, the organization's executive director
and a co-author of the report, many predictive, alternative scores
use a much larger amount of data than a typical credit score, which
is based solely on the information in your credit report.
"The credit report has about 30 factors. A lot of scores have in
excess of 1,500 factors," says Dixon.
According to the report, data might come from:
- Your transaction history. "People need to understand, at this
point in the history of predictive analytics, almost anything you
purchase with a credit or debit card can be used for scoring
purposes," says Dixon. If you pay with cash, but also use a
loyalty card, that information could also wind up in a
- Posts you make public on social media.
- Your payday loan history. If you take out a payday loan, the
payday lender may disclose your name to a third party, says
- Public records information, such as your marriage license,
birth certificate, property records and voting history.
- Forms you fill out, such as online surveys, warranty
registration cards and sweepstakes entries.
- Orders you make online, through a catalog or over the
- Your online browsing history and the time you spend on
Behavioral analysts typically add all these factors together and
use the multiple data points to calculate a score that predicts how
you will behave.
"It reveals a lot about you," says Dixon. "I don't think people
understand just how revealing our life patterns are."
Other factors that may be part of this predictive analysis
include your ZIP code, your level of education, your income and the
kind of dwelling you live in. "It becomes really, really easy for
people to make a lot of predictions and models based on that data,"
Predictions made about you
Such predictions include:
- How wealthy you are.
- Your estimated "lifetime value." This includes how much money
they are likely to earn from you over time, and how loyal you
- What products or perks you might want.
- Your creditworthiness.
Critics voice privacy concerns
Marketers say alternative scores allow companies to create
personalized experiences and deliver offers that consumers actually
"It's going to provide you with offers that appeal to you, that
are relevant to you," says Dolan. "The way I look at it, anything
that's not targeted to you is spam."
Privacy experts are not convinced the customized offers are
universally beneficial, or worth the privacy trade-off. "When you
are on the Internet, you are being followed around and tracked by
dozens, if not hundreds of companies," says Ed Mierzwinski,
consumer program director at the Public Interest Research
Some companies use your real-time browsing history to generate
predictive scores. Essentially "they are creating financial
profiles that are parallel to your credit report," says
If a lender uses alternative scores to identify potential
borrowers, "You are going to see a different credit card offer than
I am if your score is different from my score," he says.
Not for public consumption
Curious about your alternative scores and how you stack up? You are
out of luck.
Unlike traditional credit scores, predictive scores used for
marketing purposes, rather than for determining borrower
eligibility, do not fall within the scope of the Fair Credit
Reporting Act. Consumer reporting companies regulated by the FCRA
must provide you with a free annual copy of your consumer report if
you request it. Or, they must provide you with a free copy if the
information in the report was used against you. The law also
provides a mechanism for consumers to challenge inaccurate data
held by the companies.
Companies that generate alternative scores do not have to
disclose what they used to calculate your score. They do not have
to reveal what your score is -- or even that it exists.
Consumer advocates criticize digital marketers and data brokers
-- companies that collect and sell personal and financial
information -- for their lack of transparency. "There are many, if
not hundreds of consumer reporting companies that try to stay out
of the limelight," says Persis Yu, a staff attorney at the National
Consumer Law Center.
Some data brokers not regulated by the FCRA allow you to buy
your information or request it for free in exchange for some of
your personal information. But even that can be difficult.
Employees at the National Consumer Law Center, for example,
tried pulling their information from five different data brokers --
Acxiom, eBureau, Intelius, Spokeo and ID Analytics -- for a March
on big-data accuracy and found the process to be challenging. The
companies that do provide you with the information they are
collecting often make you jump through hoops to get it, Yu says. Or
they only show you a selection of the information they have
"Even the most sophisticated consumers probably aren't going to
be able to get at that data," says Yu.
Many other alternative scores offer no mechanism to request the
information that goes into the scores, or to request corrections of
Your rights are limited in many ways, Mierzwinski says.
"You don't have the right to stop them from sharing it," he says.
"You don't have the real right to look at it. You don't have the
right to change it and the law does not limit its use."
Consumer advocates also worry consumers could be unfairly
discriminated against or persuaded to use products not in their
financial interest. For example, if you have previously used a
payday lender, you may see offers for similar financial products
with high fees and APRs, rather than offers with attractive rates
and rewards. "I think industry needs to do a lot more to make sure
there aren't any predators out there going after people with low or
high scores," says Dixon.
Some consumer advocates also worry that the information used to
score consumers may not be very accurate. "One of the big problems
with these scoring products is they're deriving scores from data
that is somewhat suspect to begin with," says Paul Stephens,
director of policy and advocacy at Privacy Rights
Data brokers, for example, may have incomplete or inaccurate
information. "I checked myself and found that the information the
data brokers have on me is so incredibly wrong that it would put me
in a group that is not descriptive at all of where I should be,"
Federal regulators are starting to look at alternative scores
more closely. The Federal Trade Commission (FTC) held a
workshop on alternative scoring
in March and asked consumer advocates and industry analysts to
comment on the practice.
The Interactive Advertising Bureau's Dolan says the marketing
industry takes care to protect consumers' information.
"Privacy is incredibly important. It's important to marketers
and important to consumers," he says. Marketers aren't interested
in painting a bull's-eye on any individual, Dolan says. "A lot of
this is machines talking to machines and it's not what you think it
is," he says. "I would say, in my own experience, working in this
world, trying to decipher all this data and trying to pinpoint any
one particular person, there's no value in it."
That doesn't satisfy consumer advocates who worry consumers'
privacy is being compromised by the data collection. "It's
really important to understand the patterns we're all leaving
behind," says Dixon. "Predictive analytics and predictive scoring
are really the new future of data," she says.
'Dragnet Nation' author Julia Angwin: May I have my
12 creepy details data collectors know about