topic Re: New Bias Charges Against FICO Scores ..... unfair to minorities in Credit in the News

New Bias Charges Against FICO Scores ..... unfair to minorities

Watchmann — Sat, 14 Jul 2012 22:10:54 GMT

Interesting article from Investor's Business Daily ..... evidently our government is going to target FICO scores as being biased against minorities. Looks like more easy credit will be coming their way, courtesy of continued government meddling. And I always thought a FICO was based on an analysis of how likely you were to pay your credit obligations, regardless of who you were and where you came from.:

http://news.investors.com/article/618147/201207131919/fair-credit-zealots-on-war-path-against-fico.htm

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

drkaje — Sat, 14 Jul 2012 22:22:25 GMT

This is horrifically bad news for everyone. This has nothing to do with minorities and means the economy isn't rebounding anytime ever!

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

cassembler — Sun, 15 Jul 2012 00:41:56 GMT

I see poor credit for a given ethnic group as a symptom of a problem, not the problem itself. The causes are complex factors like education consumption, culture, and public service quality. Didn't anyone read Freakinomics?

Treating symptoms (in contrast with treating root causes) is a recipe for inefficiency at best.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

drkaje — Sun, 15 Jul 2012 01:32:19 GMT

Fairness is why a lot of people hate so much, LOL!

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

greeneman21 — Sun, 15 Jul 2012 17:27:35 GMT

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

marty56 — Sun, 15 Jul 2012 11:38:19 GMT

Common sense tells us this could never be true. Even if the formula did have an input for race, where did it come from? You CR doesn't even know your sex or religion, sexual orientation, etc.

Sadly many people will buy this as true, it's never their fault.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

cassembler — Sun, 15 Jul 2012 16:50:02 GMT

greenman21 wrote:
I'm an African american and find that offensive. Racial my ass, get off your ass, find a job and pay your bills, its that simple. Credit Bureaus don't measure your income or race (unless there is something I don't know), but how you manage credit and debt. This sounds more like an educational subject rather than credit issue. Looking at the facts here, but to say the average African American has lower credit scores doesn't tell the whole story, we also have the highest crime rate, by far the highest % of our race in jail, highest % of single families and the list goes on.

Absolutely. Again, the correlation is just that: a correlation. Statistics tells us that correlations are not a causal relationship; the scores are just a symptom of a deeper issue.

marty56 wrote:
Common sense tells us this could never be true. Even if the formula did have an input for race, where did it come from? You CR doesn't even know your sex or religion, sexual orientation, etc.
Sadly many people will buy this as true, it's never their fault.

Can you imagine the backlash if this was the case? "You're African American. Most FICO High Achievers are Asian, on average." That would be the end of FICO, at best.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

drkaje — Sun, 15 Jul 2012 17:10:52 GMT

This is a case where FICO is being scapegoated, LOL!

I just hope things turn around soon.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

greeneman21 — Sun, 15 Jul 2012 17:28:02 GMT

Great fact about Asians, having the highest credit scores, had no idea about that.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

drkaje — Sun, 15 Jul 2012 17:29:06 GMT

@ greenman,

Let's not totally dismiss the idea until they say how many points I'd get, LOL!

I keed! I keed!! :)

This being seriously discussed means a dire economic outlook, for the majority.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

DaveSignal — Sun, 15 Jul 2012 17:46:01 GMT

marty56 wrote:
Common sense tells us this could never be true. Even if the formula did have an input for race, where did it come from? You CR doesn't even know your sex or religion, sexual orientation, etc.

Sadly many people will buy this as true, it's never their fault.

Nobody is saying that the formula is biased. People are asking for a kind of 'Affirmative Action' for FICOs when dealing with certain races..... just so black people have a better chance to succeed.

I think this is stupid. But if they actually decide to do it anyway, however, that if they are going to give black people higher scores, they should curve the whole thing so that white people have slightly higher scores too and all races are at the same level as the Asians.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

drkaje — Sun, 15 Jul 2012 17:48:02 GMT

@ DS,

Better chance to succeed at going into debt, LOL!

Why not take points from Asians?! :)

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

greeneman21 — Sun, 15 Jul 2012 18:47:59 GMT

No reason to "give" anyone anything. The reports score whats in the file without regard for race. Its a waste of time and $ to even consider this, I'm black and find this to be total BS. You "earn" good credit by honoring your word and paying your bills on time....period.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

greeneman21 — Sun, 15 Jul 2012 18:52:13 GMT

Instead they should focus more on some form of credit class that helps educate high school and college kids more on the ways of credit, both positives and ramifications if you abuse it. I mean most of us have learned a great deal on these forums, especially after most of us tanked our credit in youth due to the lack of some formal credit education.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

drkaje — Sun, 15 Jul 2012 19:04:47 GMT

Would classes help?

People here get told all the time "Too many apps will drag down your score!" but they still keep at it.

Over time, people will get what this is really about. Hopefully we haven't re-bailed out a bunch of banks before the truth finally sets in.

I'm impressed, though. I thought they'd artificially stimulate more consumer debt by shortening the time CRAs can report negative information. :)

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

greeneman21 — Sun, 15 Jul 2012 19:11:19 GMT

Classes would be a step in the right direction. I know while I was in college and the Air Force I had no idea how critical credit was to your financial health, including car insurance and even possible employment.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

Imhotrodcrazy — Sun, 15 Jul 2012 19:42:12 GMT

I am going to cover myself on my next app. I am going to put my nationality down as a male White, African American, Hispanic, Asian mix.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

cassembler — Mon, 16 Jul 2012 00:37:35 GMT

DaveSignal wrote:
Nobody is saying that the formula is biased. People are asking for a kind of 'Affirmative Action' for FICOs when dealing with certain races..... just so black people have a better chance to succeed.

Good point Dave. AA is misunderstood a lot; it's not a quota system, it just basically requires that people be able to prove they didn't discriminate against a specific protected class...

However, if we adjust the scale based on ethnicity, shouldn't we also do the same for the other protected classes? That would include age, gender, race, religious belief, family status, veteran status, disability... Ask yourself, do Catholics have better or worse credit than the Jewish? Scientologists?

Imhotrodcrazy wrote:
I am going to cover myself on my next app. I am going to put my nationality down as a male White, African American, Hispanic, Asian mix.

Awesome, for highest FICO boost!

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

stan_the_man — Mon, 16 Jul 2012 07:02:59 GMT

cassembler wrote:
DaveSignal wrote:
Nobody is saying that the formula is biased. People are asking for a kind of 'Affirmative Action' for FICOs when dealing with certain races..... just so black people have a better chance to succeed.

Good point Dave. AA is misunderstood a lot; it's not a quota system, it just basically requires that people be able to prove they didn't discriminate against a specific protected class...

However, if we adjust the scale based on ethnicity, shouldn't we also do the same for the other protected classes? That would include age, gender, race, religious belief, family status, veteran status, disability... Ask yourself, do Catholics have better or worse credit than the Jewish? Scientologists?

Imhotrodcrazy wrote:
I am going to cover myself on my next app. I am going to put my nationality down as a male White, African American, Hispanic, Asian mix.
Awesome, for highest FICO boost!

Ironically, the financial sector's heavy realiance on Fico and internal scoring models is designed to completely remove race, gender, and inclusion in other protected classes from being factors in the loan process.

Before we had credit scoring, loan officers used to eye up credit applicants to determine if they had the right qualifications for getting loans. With the passage of anti-discrimination laws in the 1950s-1970s, banks needed to credit a system that didn't rely on qualitative judgements by loan officers. That's why banks started making heavy use of credit reporting and -- more importantly -- credit modeling to determine whether applicants received credit and the terms they received.

Re: New Bias Charges Against FICO Scores ..... unfair to minorities

Uborrow-Upay — Tue, 24 Jul 2012 18:04:22 GMT

Imhotrodcrazy wrote:
I am going to cover myself on my next app. I am going to put my nationality down as a male White, African American, Hispanic, Asian mix.

Awesome! You should score well in the "FICOBAMA" algorithm...and, you can pronounce "FICOBAMA" in any way you choose.

:smileyhappy: