Senior Contributor
drkaje
Posts: 3,491
Registered: ‎07-25-2008
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

cakkd wrote:

It seems like unfounded alarmism by the same people who hang the financial crisis on the CRA.


CRAs had little or nothing to do with the financial crisis.

 

People with scores too low for cell phone contracts were being given mortgages. Greedy, unregulated lenders took advantage of people who felt entitled to stuff they couldn't afford.

 

Banks were bailed out and have money to lend with nothing standing in their way but FICO scoring models. Lowering underwriting standards would scare away investors.

 

In this case; race is just a distraction to stop people from asking hard questions.

 


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Established Contributor
stan_the_man
Posts: 855
Registered: ‎06-29-2010
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

cakkd wrote:

"I would take the bet that the government involved in credit scoring any day of the year."

 

Wuh? Is involved or will be involved?

 

"Going to" implies a definite plan. I don't see anything about a definite plan in this article. 


The Consumer Financial Protection Bureau now oversees credit reporting, and has expressed an interest in regulating/investigating credit scoring. They have broad regulatory authority over anything to do with consumer finance (meaning nothing but an act of Congress can stop them from taking action):

 


http://money.usnews.com/money/blogs/alpha-consumer/2012/07/16/your-credit-score-will-soon-get-more-s...

In a speech in Detroit Monday, Consumer Financial Protection Bureau director Richard Cordray pointed out the importance of access to credit: The ability to take out loans makes it possible to get a college degree, buy a home, use a credit card, or buy a car, he said, adding that employers also increasing use scores to determine whether an applicant is eligible for a job.

 

“Whether you realize it or not, [credit agencies’] scorekeeping exerts a tremendous and growing influence over the ways and means of your financial life,” he said. That’s why the bureau chose to focus on the industry: The new supervision means that the bureau will have the authority to conduct on-site examinations of agencies to check whether they are complying with the law, to better understand the companies’ business models and practices, and to address practices that might be hurting consumers, Cordray said.


 

 

Super Contributor
marty56
Posts: 5,696
Registered: ‎10-06-2007
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

I don't see a practical way for the government to "tweak" FICO scores to give an advantage to certain groups of people, since only humans are biased.  I can see the government saying things like yeah we know Marty has a 520 FICO score but treat him like a 765 since he's an ex New Yorker living in Texas, or perhaps a quota based system where 520 Martys get approved 2 to 1 over 520 Johns.

 

Of course once they add race and income to your credit report or assume something based on your address, it's game over. 

 

LOL I can see adds like"Use our EXNYFICO FAKO score, it's Ex New Yorkers like Marty Friendly".  Then again maybe not so funny.

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Senior Contributor
drkaje
Posts: 3,491
Registered: ‎07-25-2008
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

@ Marty,

 

Even if people don't know the formula, paying on time will eventually lead to a good score. Someone not knowing that much probably shouldn't be using credit. :smileyhappy:


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Valued Member
cakkd
Posts: 35
Registered: ‎08-04-2012
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

What do we know for a fact? 1) The Fed has been keeping data on the disparity in credit scores between minorities and whites; 2) The Washington Post published an article detailing these disparities; 3) the new CFPB vows to look at scoring models and make sure scoring agencies are following the law.

 

In sum, unless you are of the stripe who constantly needs to keep throwing fodder on the fire of angry white male victimhood, it's a non-story.

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Senior Contributor
drkaje
Posts: 3,491
Registered: ‎07-25-2008
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

Scores track behavior. Even if the scores are lower, it's a community issue.

 

Mark Twain or Disraeli had a quote about the three kinds of lies, LOL!

 

People can make statistics say anything they like. Someone could easily adjust for population size, then bucket by SES, and show no statistical difference.


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Valued Member
cakkd
Posts: 35
Registered: ‎08-04-2012
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

I wonder if there's a correlation between a low credit score and getting exercised by amateurish articles like the one cited in the OP.

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Revelate
Posts: 9,764
Registered: ‎12-30-2011
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

cakkd wrote:

I wonder if there's a correlation between a low credit score and getting exercised by amateurish articles like the one cited in the OP.


Oh noes, sensationalist media, quelle horreur! :cattongue:

 

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Super Contributor
marty56
Posts: 5,696
Registered: ‎10-06-2007
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

drkaje wrote:

@ Marty,

 

Even if people don't know the formula, paying on time will eventually lead to a good score. Someone not knowing that much probably shouldn't be using credit. :smileyhappy:


The irony in anyone thinking that the scoring system is biased comes from the fact that even soneome who has a low income can have a better FICO socre then soneone who makes 6 figures and beyond.  Back in my credit dark days I only had a 300 CL Sams card and 2400 Gulf gas card to use since every thing else had been maxed out.   If I could have gone back in time and just had those 2 CCs on my CR, my FICO score would have been 300 point higher then it actually was.  Would it have been smart of FICO to give me more points back then because I was an ex-New Yorker living in Texas and for a lender to give me more credit so I could have generated more CC debt that most likely would have landed me in BK and the CCCs down say 100k?

It's not about how much you have or how little but how you use it.

 

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Valued Member
cakkd
Posts: 35
Registered: ‎08-04-2012
Re: New Bias Charges Against FICO Scores ..... unfair to minorities

Who is saying that the FICO scoring formula is biased?

Starting scores (June 9,2012): 591(TU), 582(EXP), 591(EQUI)
Current scores: 667(TU), 706(EXP), 697(EQUI)
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