Consider an algorithm that perfectly predicts defaults. If such an algorithm existed, non-defaulters would be able to borrow at the risk-free rate. Some people

Consider an algorithm that perfectly predicts defaults. If such an algorithm existed, non-defaulters would be able to borrow at the risk-free rate. Some people who would be unfairly denied loans in the current regime would be able to get them. This is clearly desirable. Improving your ability to predict defaults is simply moving in the direction of that perfect algorithm. The inputs you use, whatever your emotional reaction to them, are irrelevant. By not optimizing your predictions to the fullest extent possible, some people are worse off just as some others are better off. There is always such a trade-off. There is absolutely nothing special about the status quo. The idea that one side of this trade-off is somehow more ethical than the other is completely absurd.