Money: They know where you live

You may be 'carefree', 'burdened' or 'impoverished'. As a target for mail-outs from financial firms, your postcode defines you. Faith Glasgow reports

Ever wondered why you are bombarded with personal invitations to apply for platinum credit cards or competitively priced home-improvement loans? Do you think they send these letters at random? Think again.

A lot of companies know all about your attitude to telephone banking, and how likely you are to own unit trusts, blue-chip shares or a personal pension. They also know what kind of credit cards you hold and which newspapers are most likely to influence your decisions.

They group us all according to the kind of neighbourhood we live in - right down to the postcode (on average, just 15 households). They know the characteristics that are typical of your postcode, in terms of the kind of financial services you're likely to buy, the level of risk you represent and your future spending power.

It is all based on a sophisticated marketing tool known as Financial Mosaic, produced by the credit-rating firm Experian. The information includes the proportion of households in an area that hold PEPs, have mortgages, are directors of companies or are burdened with bad debt. It also includes yardsticks for building up a financial profile of the local population. These could be the proportion owning cars, the age structure, preferred newspapers or the level of mobility in the area.

Each of us belongs to one of 37 types of nattily named consumers. If you read the Independent on Sunday, for instance, you're relatively likely to be based in a Financially Carefree, Playing the Market or Captain of Industry locality. You're unlikely to be among the Impoverished Elderly (as they read very few newspapers) or Overborrowed Renters (whose preferred reading is the Daily Star).

A Financially Carefree neighbourhood is dominated by well-educated, well- paid young professionals, often unburdened by mortgages or marriages. Companies look to flog them something to make life easier (such as telephone or internet banking, or a gold credit card) because they are not particularly interested in the niceties of interest rates. The greatest concentrations are in London and East Sussex, followed, somewhat surprisingly, by Avon, Dorset and the Scottish Highlands.

Players of the Market, meanwhile, are reasonably prosperous empty-nesters, with time on their hands to investigate the best investment routes and minimise tax liabilities.

They often own a range of investments from privatisation shares to unit trusts, plus credit cards and loyalty cards. You'll find them mainly in the Home Counties.

By contrast, Overborrowed Renter neighbourhoods - found primarily in the West Midlands, Humberside and parts of Glamorgan - are likely to be on large housing estates. They may well be single parents, unemployed people or unskilled labourers, and they're dogged by bad debt. Companies don't bother trying to sell insurance or collective investments in these areas - and they don't even think about issuing credit cards.

In building up its profiles, Experian uses census statistics and market research information plus more obscure sources, including the directors' database at Companies House, the register of county court judgments and shareholders' registers.

A lot of information can be extrapolated just from the electoral roll in an area. "Streets containing Samanthas and Justins who live in households with mixed surnames and who have been present at that address for under two years offer opportunities to sell the types of products purchased by young people," Experian explains.

"The prospects are better than streets where we find electors with names such as Percy or Doris at addresses where both have the same surname and have been present on the electoral roll for 10 years or more," it adds.

The data is broken into 10 major groups, each with their own common characteristics (see box). But more specific details can be gleaned by looking at the sub-divisions within each group, one of which will dominate any particular postcode. The Adventurous Spenders group, for instance, incorporates Financially Carefree types but also Poor Risk Homeowners and Mid-market Borrowers.

If a company wants to get a handle on the population groups most interested and least interested in unit trusts, the profile indicates that it should concentrate on Discerning Investors and Capital Accumulators, followed by Good Paying Realists and Farmowners & Traders.

By contrast, Equityholding Elders, Adventurous Spenders and Burdened Borrowers are all more likely to invest directly in shares than in collective investments.

You get the picture? This is exactly the sort of information that enables financial services companies to hit the nail on the head when it comes to accurately targeted marketing efforts.

But from the consumer's point of view it's a further indication of the extent to which Big Brother's capitalist cousin is able to keep tabs on our individual preferences - and manipulate them to his own ends.

ADVENTUROUS SPENDER OR DISCERNING INVESTOR - WHICH ONE ARE YOU?

n Adventurous Spenders - areas dominated by young, educated single people in good jobs; relatively inexperienced users of financial services, and often slack in managing their finances; a lot of new current accounts and credit card spending; some bad debt.

n Capital Accumulators -- wealthy neighbourhoods populated by business people; five times the national concentration of company directors; high share ownership; high use of consumer credit and gold credit cards proliferate.

n Discerning Investors - empty-nesting professionals with small or paid-off mortgages, now focusing on getting the best return on their savings and retirement plans; particularly high share ownership and wide use of investment products; not great users of credit beyond credit cards (for convenience rather than as a borrowing facility).

n Equity-holding Elders - wealthy retired homeowners, some running their own businesses; shareholders, often in blue-chip stock; sitting targets for annuity sales, home equity schemes and inheritance planning.

n Burdened Borrowers - young couples with both partners working in the face of heavy mortgages; they borrow on cards and through bank loans and tend to be well insured, but investment products are rarely bought; "trading up" in

homes is common.

n Farmowners & Traders - dominated by self-employed businesses including many farmers, especially in rural areas; business and personal finances often overlap, so commercial credit is relatively common.

n Good Paying Realists -- middle-income, middle-aged owner occupiers; as mortgages diminish they often spend on home extensions and savings products such as unit trusts.

n Hardened Cash Payers - close-knit communities in lower- income areas; often council tenants with strong sense of financial independence; cash is king, debt is low and consumer credit is mostly in the shape of mail order.

n Indebted strugglers - relatively low-income areas where people are reluctant rather than unable to repay loans, often on irresponsible commitments.

n Just About Surviving - low income, high-unemployment areas, where paying basic bills can be a problem and debt difficulties are involuntary and hard to solve; few financial assets.