Re: New Bias Charges Against FICO Scores ..... unfair to minorities
07-16-2012 12:02 AM
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?
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.