| Insurers Win at US Supreme Court on Credit Law (Update4)
June 4 (Bloomberg) -- The U.S. Supreme Court limited the rights of consumers under a federal credit-reporting law in a victory for insurers Safeco Corp. and Geico Corp. and other financial services companies. The justices today said the Fair Credit Reporting Act doesn't require insurers to notify every consumer who is offered something short of the lowest premiums when seeking a rate quote or applying for a policy. ``Notices as common as these would take on the character of formalities, and formalities tend to be ignored,'' Justice David Souter wrote for seven of the court's nine justices. The court also unanimously limited the applicability of a provision that permits damage awards even when consumers don't suffer any injury. Although the justices didn't go as far as the insurance industry had sought, they said Safeco wasn't subject to the provision because it didn't recklessly violate the law.
Fair Isaac to Adjust Credit Scores to Stem Credit Renting Practice
Fair Isaac Corp. said this week tha the next version of its widely used FICO score will no longer consider certain types of credit card accounts, closing a loophole that allowed strangers to coattail on a cardholder's good credit. The new FICO score formula won't include authorized user accounts users on credit cards who are not responsible for paying the balances but are approved to make purchases with the cards. Often, authorized users are family members of a cardholder, such as college students on their parents' cards or spouses who have little or no credit of their own. These types of accounts can improve a credit score if the primary cardholder kept low balances and paid the balance on time over a long period. Minneapolis-based Fair Isaac plans to introduce the new scoring methodology in September to one of the three major credit reporting agencies: Equifax Inc., Experian Information Solutions Inc.
Need Good Credit? Borrow Mine!
People with bad credit can spend years trying to make up for past mistakes. But an increasing number of people have found a quicker way: buying a share of someone else's good credit rating. The practice is called piggybacking, and lenders and credit reporting agencies aren't happy about it. At first, it may sound like identity theft. But people with good credit are voluntarily working with those with bad credit. In fact, according to a recent AP story, you can make decent money selling your good credit -- with the financial companies that act as intermediaries taking a cut as well. How it worksThe idea behind piggybacking is elegantly simple. By adding someone as an authorized user on your credit card, you essentially give him access to your good credit. Obviously, you wouldn't want to let a stranger actually use your credit card to make charges.
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