It seems as if it’s taking more resolve and skill than ever just to go about the tasks of daily living without getting financial institutions involved one way or another. Among other inroads, the banks are always looking over St. Cloud consumers’ shoulders through the credit and debit cards they offer. The service is substantial—a quick insert of the plastic at checkout is safe and speedy; at month’s end, an online statement of purchases neatly listed onscreen—it’s a matter of real convenience.

It’s hardly surprising that St. Cloud merchants will attest to the increasing percentage of cashless transactions. The once-familiar cash register sign, “NO CHECKS ACCEPTED” now increasingly reads, “NO CHECKS OR CASH ACCEPTED.” Once the pandemic hit, the promotion of touchless payment methods as a public health measure ensured we’d see a lot more of those.

St. Cloud consumers might therefore have been more than mildly interested in last week’s Wall Street Journal ‘Personal Finance’ feature that ran under the cautionary headline, “Why You Shouldn’t Always Tell Your Bank How Much You Make.” According to the article, the act of divulging income can lead to a downgrading of the credit card company’s estimate of a cardholder’s creditworthiness—their credit limit could be lowered.

The Journal reports that those inquiries into cardholders’ incomes have increased astronomically—“more than 500% in the past three years.” The credit reporting agencies (Equifax, Experian, and TransUnion) are adept at telling card issuers how promptly a cardholder has repaid past debts—but that paints an incomplete picture for someone whose income has been reduced. One agency (Equifax) does offer lenders an income-verification service—but that data can only be legally used to increase a customer’s credit limit, not to lower it. So banks have to ask for current income data from cardholders themselves.

The banks seem to be onto something. According to the Federal Reserve, credit-card delinquency rates are up, and in the first quarter, about 20% of banks cut credit limits for new or existing customers. That could be due to banks’ recent tightening of lending standards—but it could also be at least partially because of public ignorance of some relevant facts. First, sharing income data with credit-card issuers is voluntary, and second, federal law generally prohibits financial institutions from sharing “nonpublic personal information”—like income. But St. Cloud consumers need not necessarily feel defensive when a card company comes asking for income information. It can also be a sign that they want to raise the current limit since they are required by law to ascertain a borrower’s ability to repay.

In any case, a solid credit score can be a decisive factor when buying a home in St. Cloud, so it pays to keep track of where you stand—not just once, but regularly. Call me for other ways you can prepare for buying (or selling) a home in St. Cloud! 

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