by Bill Rounds: Fool
Facial Recognition Technology
and vast consumer databases has made it more profitable for banks
to spy on you, especially if they are giving you credit. Better
privacy is becoming essential for your financial privacy. Banks
are looking much deeper into your private financial transactions
to decide whether to lend to you or not. The tools that they use
are invasive, unnerving, and dangerous. Here are 3 secret metrics
that they use to determine credit, how to prevent banks from being
able to spy on you, and what to do to have better privacy if you
still want credit.
Privacy For Rent Payments
Rent can be
a very private transaction with no public paper trail. This is not
the case when you deal with a large property management company.
Credit bureaus are now collecting data from large property managers
and gathering it in their own transactional
databases. If your property manager knows something about you,
so do the credit agencies. This usually means social security number,
name, how much you pay, your payment history and where you live,
even your emergency contact.
Most of this
information is bought and sold just like most other database records.
So if you think your address is unlisted, but you rent a property
with a property manager, think again.
There are at
least two ways to get better privacy to prevent this. The first
is to deal directly with the owner, not with a property manager.
At least use a small mom and pop property manager because they are
less likely to have a sophisticated database of renters that they
share with other companies. The second is to use a business entity
to rent the property. An LLC can be formed and all dealings with
the property manager will be under that name. If you live in a state
where an LLC is expensive to form, you can almost always use an
out of state LLC to rent a property without having to register it
as a foreign LLC. You can use an anonymous New
Mexico LLC, which has a $75, one-time fee and no annual requirements.
The only recurring costs will be to maintain a registered agent.
Privacy In Bank Deposit Behavior
obviously maintain records on their own customers. Banks are
now using that deposit history to determine your income and credit
a good history, yet protect better privacy, you may want to set
up recurring, regular transfers with a separate account in a separate
bank where you will get a loan. It can either be in your personal
name or business name. A regular history of deposits and withdrawals
can preserve a solid foundation for credit from that bank.
Of Your Assets
Banks now estimate
your balance sheet. They want to see how many assets you have to
determine if you are a credit risk or not. If you were to default
on any loans, or declare bankruptcy, they want to know that there
are some assets there to get.
banks and other credit institutions from being able to see your
assets, use business entities and trusts to hold major assets, like
large investment portfolios, real estate, machinery or equipment,
cars or large collections.
Strategy To Get Credit When Needed
Using any of
these strategies to protect your privacy may impact a lender’s
willingness to give you credit. You can still get credit if you
can satisfy the bank’s fears. If you are using business entities
and trusts to hold your assets, you will not have as many large
assets in your own name. This can look a bit risky
to a potential lender. Any individual asset can be offered as collateral
for a specific loan. In those cases, your ownership of the asset
is still not public, yet you have satisfied the lender’s need
for security. Also, in case the bank presses the issue, they will
be limited to the collateral that was offered in case of a default.
Otherwise, they might be able to go after any asset of their choosing,
rather than the asset of your choosing.
Banks and credit
agencies are going to try and spy
on their customers. That is their nature. You can limit their
ability to spy on you and have better privacy by avoiding property
management companies, using business entities to rent, using multiple
bank accounts, and holding major assets in trusts or LLCs. Let us
know if you have any other creative and legal ways to keep the banks
from spying on you when you don’t want them to. You might also
consider taking other steps to protect
your bank privacy, bank
offshore, or deal as much in
cash as possible.
with permission from How to
Rounds, J.D. is a California attorney. He holds a degree in Accounting
from the University of Utah and a law degree from California
Western School of Law. He practices civil litigation, domestic
and foreign business entity formation and transactions, criminal
defense and privacy law. He is a strong advocate of personal and
financial freedom and civil liberties. This is merely one article
of 73 by Bill