FICO Fair???

[KeithW]

If the FICO formula is kept secret, then who is to say that it isn't unfair? Maybe they give you a better score if your a woman, and have the exact same history as a man. Or maybe they give a 60 year old, with an identical history, a better score than a 20 year old.

If it's secret, then who makes sure they aren't discriminating and breaking laws?

[bdhu2001]

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@KeithW wrote:

If the FICO formula is kept secret, then who is to say that it isn't unfair? Maybe they give you a better score if your a woman, and have the exact same history as a man. Or maybe they give a 60 year old, with an identical history, a better score than a 20 year old.

If it's secret, then who makes sure they aren't discriminating and breaking laws?

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If they've added gender and age to the algorithm, it's to determine your credit risk.  Thus, it wouldn't be considered discriminating.  Just like car insurance companies charge more for 16 year olds.  If the distinctions are to access risk, it's serving the agreed upon purpose of the service (algorithm).

[CreditDunce]

If they are discriminating, it will eventually come out.  An insider will squeal the secret, etc. 

But the main reason they won't discriminate is it bad for business.  They are in the business of wringing the most money out lending money.  That means they only care about figuring out the chances you will default.

Age is a special case.   Legally, they can't use it for credit scoring purposes.  But some 20's are not very responsible.  They get around this issue by counting age of credit history. 

Note, I am not saying it is FAIR.  Only that they are not discriminating.