@longtimelurker wrote:
@UncleB wrote:
@longtimelurker wrote:
@UncleB wrote:
@TrueGeminiNC wrote:That is the point - it is not meant to isolate or drill down to the individual level. This would be a discramanotory. Regardless if you pay your credit card bill on time or not - I am certain all credit card companies look at areas where they have high default rates.
You may pay your credit card bill on time - however, others who live within your area may not. Unfortunately, similar to insurace - you become a casualty regardless if you are a good driver or not.
And too - lets be clear, I am not saying this is a singular data element - but, I do beleive this data element coupled with others does drive credit card company decisions.
I understand that it's not a singular data element, but where your analogy breaks down is in the comparison to auto insurance.
With auto insurance you can become a casualty due to someone else's choices, negligence, etc. Your rate is partially assigned based on a 'speculation' (albeit very educated) as to what your chances are of encountering one of your 'neighbors' on the road.
There is no similar 'encounter' with my neighbors that can impact how I pay my bills.
I understand you're saying that creditors have the ability to do this, and I'm not arguing with that - they have the 'ability' to do many things. I'm just saying that logically it makes no real 'sense', and any company that has business practices that allow for this had better be ready for the 'blow back' if word gets around, just as Amex found out the hard way a few years ago.
But remember that auto insurance credit score is used in rate setting in many states (those where it is not illegal) and equally there is no direct connection between that and your liklihood to be an accident. With big data, companies can claim that things correlate, and certainly zip/region and default might.
I do remember... and that's exactly my point.
Correlation doesn't necessarily equal causation. If anything, when my credit was bad I was more careful since I knew any accident would cause a significant financial burden, yet in some states (mine included) companies are allowed to use credit data to determine rates.
I'm not arguing that it can't be done, I'm simply saying it shouldn't be done, since there's no true causation (i.e. cause and effect). We have laws against charging folks different rates based on race, since it makes no difference in reality regardless of what 'big data' says. However, if you were to crunch enough numbers you'll find that one race likely has a "statistically" higher rate of safer drivers... should they get a discount? Of course not. This is why you can't always just rely on 'statistics'.
If somebody were to be really motivated, they could crunch enough numbers to prove how safe left handed drivers are compared to right handed drivers, and adjust their rates accordingly... "the data would support it". Would this be fair - or even factually accurate? Of course not.
That's my point with using where somebody lives to determine their interest rate, AA, CLD, etc. If you 'torture' the data enough you can basically create justification to take any action you want... if it makes actual business sense do so is another matter.
I guess I would disagree then! If it were proved that left-handed drivers had a poorer safety record (living in a right-hand dominated world) in what sense would it not be fair to charge them more (why should everyone else have to pay the costs). Like race, it's not their fault or choice, but neither is more poor eye/hand coordination that makes me more likely to hit things. Now "protected class" rules can prevent discrimination, but that is social policy and doesn't mean the correlation or analysis is wrong.
Yep, we can 'agree to disagree', and I'm not even going near your argument!
Over and out...