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If given enough data, would it be possible to decrypt the exact FICO formula? If such a thing ever happened would the FICO scoring system collapse?
@Scene wrote:If given enough data, would it be possible to decrypt the exact FICO formula? If such a thing ever happened would the FICO scoring system collapse?
I don't think there's enough data out there to reverse engineer the FICO formulas, because every little thing can change anything else. There's way too many variables in that equation to solve for one part of anything.
And assuming it was somwhow reverse-engineered or compromised through nefarious means, would it kill scoring?
No more than reverse-engineering of the Coca-Cola formula would kill Coke.
Industry and consumer acceptance, as well as distribution system, would still be there.
One could not obtain any intellectual property protection on a clone, as it would have been previously in public use and on sale, thus preventing a patent, not an orginal work, thus precluding a copyright, and any us or reference to FICO in its marketing would be a misappropriation of their trademark.
How would one "prove" to customers that it was the same without also disclosing the innards of the clone, thus totally putting it in the public domain for all to reap the competitive benefit of their reverse engineering for free?
The algorithms also constantly change, making the reverse-engineering a never-ending quest and expense.
It might funnel off some business or reduce the cost, but the need for the scoring would remain.
All of these were considered when FICO made the decision years ago to forgo patent protection, and retain their algorithms as a trade secret.
It's impossible to reverse-engineer it anyway due to scoring buckets. Your score is dependent on everyone else's, and vice-versa.
I'm pretty certain it couldn't be done, and even if could, it may hurt more than it helps. Most people here are able to manipulate their score to some degree to "appear" as a better credit risk than they are in actuality. If the code was cracked there would be a much larger percentage of the population doing it, which would really water down the value of the scores, possibly even necessitating a new system.
@Scene wrote:If given enough data, would it be possible to decrypt the exact FICO formula? If such a thing ever happened would the FICO scoring system collapse?
I actually do believe this is possible, but I'm estimating the resources required are prohibitive (i.e. we would need more "samples" than all of the users on this forum.)
Even if you could, what would we learn? Avoid late payments and keep your util low? I'll save you the trouble - you should avoid late payments and keep your util low