@Anonymous wrote:
"In Russia, applicants can get loans based on answers to “psychometric” surveys that evaluate their verbal and arithmetical skills. Meanwhile, a study of a German e-commerce company’s transactions found people’s “digital footprints” — whether they use iPhones, have numbers in their email addresses or shop at night — can predict their risk of default."
Yes, credit scores still matter and here’s how much
Great article.
I found it interesting that, "iPhone users are less likely to default than Android users, while those who have email numbers or shop late are more likely to default, according to the study."
I think that there's a simple explanation for this. Apple charges more for their phones than Google or Samsung. So, naturally, with higher priced items... you're going to get a group of consumers that have more wherewithal to pay their bills.
Also, Iphones have a very strict platform, whereas other phone platforms allow the user far more control. I think there's something to be said about people that are willing to conform to rules, when it comes to paying their bills. People that don't like rules are more likely to say, "screw this," and default. Of course, it could just as easily be predictive of the reverse outcome, whereas, users that are given more freedom - should inherently be more responsible.
Also, people that, "shop late," are either tweakers, or are on an irregular schedule; which is an indicator for lack of conformity.
As far as this whole big-brother evaluation trend is concerned, American Express has been doing it for years. To wit: American Express was once rumored to have a blacklist of merchants, (i.e. McDonalds, Walmart) that if they saw a card holder frequenting those low-class establishments... they would be brought up for financial review; because it indicated that they were in financial difficulty.
I think most banks have algorithms that identify financial distress, without necessarily singling out merchants. For example, if you put grocery, food, and fuel purchases on a credit card, and then proceed to carry the balance... that might be considered to be indicative of an impending financial hardship.
I used to think that using someone's personal social media accounts against them would be a low blow... but, when you think about it, people are just too stupid to exercise their own right to privacy. Instead they speak up and speak out about anything and everything... and prove how ignorant they are. Like the saying goes, better to be silent and thought a fool, than to open your mouth and remove all doubt. I don't feel sorry for them.
Come to think of it, if I were a bank CEO, I would use every bit of real world data that I could to evaluate people. If they hang out with people that have bad credit, than there's a good chance that some of that might rub off on them, as well. It's just the facts. Trends matter. Sure, there are those that can defy the odds and break free from a low-class existence, (which by the way, has little to do with money) but, in the end, a tiger cannot change its stripes.
