There is a lot of scary stuff out there regarding credit cards and credit scores.   And why not?   Credit scores are determined in about the most consumer unfriendly way.    There is a secret formula out there that determines your FICO score, and the Fair Isaac corporation that refuses to disclose how they come up with it.   It gets even more confusing when you realize that all of the other credit scores out there that you can pay to see are not FICO scores, but some other formulation.   Finally, FICO itself is a moving target, as the only thing that is disclosed about the secret formula is that it changes all the time.

Credit Score Urban Legends

Over at the Mint, there is a helpful article that seeks to debunk some of the misinformation that is out there.    They cover some really good subjects out there and it is worth a read.   Many people are surprised to know that a credit guru like myself is not checking my credit score all of the time.     I don’t check my credit score every day for the same reason I don’t check my blood pressure.    I always pay my bills on time and I know that my finances, like my body, are healthy.     Yes, I do check my credit report from time to time for errors, but I am not obsessed with it.    I think the Urban Legends article shows that too many people are worried about the details around the edges of their credit report.    I focus on the most important aspects of financial health; paying my bills on time, not using all of my available credit, and keeping a good credit history.    Do those things, and you shouldn’t stay up at night worrying if closing an unused account damaged your credit.

Fear Of A Chargeback

The chargeback is one of the most powerful tools that a credit card holder has.     It is this power, above others that separates credit cards from the far more impotent resources available to debit card users.  I have written about how merchants live in fear of a chargeback, as a successful chargeback can increase the transaction fees on all future sales.

What Are Chargebacks For?

Chargebacks are a privilege given to credit card users that allows them to dispute charges for goods and services not provided or delivered as promised.

To be sure, I am rarely forced to use a chargeback, for the same reason police officers rarely discharge their firearms.    In almost all instances, the threat of a chargeback is the fastest way to get a merchant to do the right thing.    Once the merchant realizes that you are not going to go away, but you area going to fight them with your most powerful weapon, the typically cave.     I have used this threat several times with airlines.  In one instance, United decided to charge me some random fee that they did not disclose.    They suggested that I accept a voucher for future travel, while I suggested they refund me the excess amount or I would issue a chargeback.    It would be like a thief taking money from your wallet, getting caught, and then giving you a coupon to make up for it.    I threatened a chargeback as I did not authorize the charge, and United sent me a check that week.

In another instance, AirTran sold me an upgraded seat that I never got to sit in due to my flight being canceled, and me being put on standby for another flight.    Again, the airline offered me coupons, and I threatened a chargeback and insisted on cash.   Airtran credited my card immediately.

Should The Card Holder Fear A Chargeback?

According to this article at Walletpop, merchants are starting to blackball people who do chargebacks.    I can understand the frustration a merchant feels when a person abuses chargebacks by fraudulently claiming merchandise was not received.    It would be very easy to get away with such fraud the first few times, but I would imagine a credit card company would catch on soon enough.

On the other hand, this article claims that just one chargeback is enough to get you on the black list of BadCustomer.com, and worse, they would charge you $99 to get off it.     I am highly skeptical of such claims.   First, I find it incredible that issuing a legitimate chargeback might lead one to be on such a black list.   Second, I would probably eat my computer before I paid someone $99 to take me off some list that I was erroneously put on.  In addition, I would gladly take my business elsewhere if a merchant accused me of potentially defrauding them.   Even, for the sake of argument, if an actual faudster was put on the list, this article seems to imply that paying $99 will get them off, so what’s the point?

Their may be a place for black lists that target repeated fraudsters, although I would prefer they simply be prosecuted.    That said, I would not take the author’s advice seriously when he says; “And for a legitimate customer thinking of doing a chargeback? Contact the company first for a refund. It’s a lot easier than paying $99 to get off a blacklist.”    Yes, you should contact the merchant first if you are not getting what you paid for, but don’t be afraid to threaten a chargeback when you know you are in the right.