@trusty wrote:
It just goes to show that times have really changed over the last 30 or so years. Just about everything is automated now, except mortgages... and even mortgage underwriting is heavily aided by automation that narrows down the applicant into eligible loan types.
Personally, I've found the community data points, nowadays, regarding credit pulls, to be as close to 100% accurate as they've ever been.
In some ways, I miss the way things used to be. Getting all dressed up and walking into your local branch, and over time, forming lifelong relationships with your local bank. One's reputation used to be a lot more meaningful, back in those days.
Conversely, credit scoring is all around more fair, because it takes the human element, and our inherent biases, out of the equation.
However, the issue with automation... is gaming. Rampant gaming of the system ends up ruining good things for everyone else. So, there are two sides to the coin.
That said... credit pulls have very little mystery, anymore. But, it did used to be cool to know things like what state a SSN was originated, based on its prefix. Now the SSA issues random numbers. In another decade or two, both brick and mortar banks, as well as cash itself, will probably cease to exist.
It's weird to see the world change from in person, to total automation...but that's what's happening right before our eyes. It's just unfortunate that fundamental human interaction, and the need for the human touch is getting lost in the process. It's actually starting to get frightening, as there is less and less a need for anyone to interact with anyone else to get anything done. Neighborly behavior is also becoming something from a bygone era. It's sad really, as automation is breaking down society just like dystopian fiction. Well, now it's all coming true, and who knows how far it leads?
Your outstanding post addresses a few different issues.
The first two relate to credit decsioning directly, so I'll address those first.
From looking at a wide variety of posts, it is obvious that people are sharing information--generally quite acurately, and to the best of their knowledge. In general, I must admit that I don't have a very high opinion of the veracity of information written in the majority of forums, because people tend to write whatever they believe is true, and what they believe is often incorrect. However, this forum is probably among the best, as people provide information based upon their own experiences. Additionally, the tone of the posts are generally quite friendly and supportive, which isn't the case all forums.
Your second point relates to credit scoring and associated automation. FICO credit scores were developed in the 1980's. This was before I worked in the industry, but my understanding is that the original FICO score (the equivalent of what's known as FICO-8) was developed using TRW (now Experian) credit data. Equifax and TransUnion provided very similar information to that of TRW, but excluded some information, while providing some additional info. And, of course, their formats were/are different. The Beacon and Defender scores, respectively, were designed by Fair Issacs to take this into account, and make these scores as close as possible--both in terms of alignment and accuracy--to the original FICO score. The Company did such a good job that most people didn't even refer to the Equifax and TU scores by their actual names; instead, people just referred to them as FICO scores.
I've gone a bit off topic here. My point is that by the late 1980's, these scores were used, in part, both to decision applications and to set criteria for preapproved credit card offers. But it's important to note that they weren't--nor have ever been--the only criteria used. At the major issuers I've worked for, other subjective criteria was applied. Credit Risk Management wrote additional policy. Such policy might include, among many different examples: not having more than a certain number of inquiries on a credit report within a given period of time; not being delinquent by a certain number of days on any tradeline(s) within a specified period of time (e.g., 6 months or a year from date of application); or any other combination of varying criteria. Some issuers have (or used to have) corporate policies against approval of any applicant whose credit report indicated bankruptcy at any time. Finally--depending upon the individual(s) who held senior positions in CRM--other, more unusual, factors may have been considered. For example, for the short time this policy was in effect, a person who had more than a couple of parking tickets (yes, parking tickets!) could have his/her application declined (even though, depending upon municipality, parking tickets are not included on credit reports). My overall point is that credit score was not the only variable used to approve or decline an application.
I should note that the application of additional criteria was, to some degree, a matter of controversy. The idea of using additional criteria in conjunction with score was, of course, to further improve the precision with which applicants were approved, the goal being the attainment of a loss (charge-off) percentage for the particular credit card campaign that was no higher than considered acceptable at the time. But there were many who didn't agree with doing this. Their argument was that since FICO score was such an effective predictor of loss rates (actually, it forecasts 90-day delinquency within a certain period of time after account opening, which is highly correlated with charge-off), that use of other criteria was unnecessary and/or redundant.
Also, notably (for anybody interested), Fair Issacs offered what was known as a "custom score." Before both widespread use of the Internet as well as the vast number of mergers in the credit card industry, it was thought that the nature of the populations that applied for credit cards from specific banks (excluding direct mail solicitations) might vary depending upon area/region of the country. That is, people who applied for an account using a "take-one" application (i.e., an application available in a branch or other location for anyone to take) from the issuer I worked for could be different in terms of how they handled credit card accounts from people located in other parts of the country. I worked for an issuer whose branches were located principally in a large, Northeastern city. However, we found that the custom score was no more effective than the regular score, and abandoned its use.
Your third point, regarding human interaction, isn't related solely to the credit industry. The credit industry is just one example of many industries in which human interaction is either greatly reduced, or completely absent. I don't believe that automation is really the culprit here. After all, one could argue that automation really began, to some degree, a long time ago--say, for example, with the First Industrial Revolution.
While there are a variety of different factors, it seems to me that widespread use of the Internet for so many different functions has had the biggest effect. Online sales are now so large that many brick-and-mortar stores, including some big chains, are being, or have been, forced out of business. Moreover, so called "social media sites," like Facebook, may, by their very nature, induce less face-to-face interaction. I strongly agree with you that this phenomenom is both extremely concerning and disturbing, with widespread implications regarding what it means to be a "human" these days. But since this a forum relating to FICO scores, I don't think it's appropriate for me to comment on this any further.
