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Yes, it is. But if you're designing an algorithm that assesses credit risk and you do this, you will lose money compared to a company that does not do this.
by kauffj 8y ago
Yes, it is. But if you're designing an algorithm that assesses credit risk and you do this, you will lose money compared to a company that does not do this.
- chrisco255 8y agoYou might even cause a financial crisis along the lines of the 2008 disaster.
- toomuchtodo 8y agoAs long as you're too big to fail and get bailed out, it's someone else's problem. EDIT: I didn't say this was just or right, just the current state.
- sangnoir 8y agoThe cost-to-benefit analysis of wheelchair ramps doesn't look great either (compared to not building one). Focusing on profit alone leads to some pretty terrible outcomes for people.
- swsieber 8y agoTaking credit when you can't pay it back doesn't just hurt the bank - it hurts you too. Getting loaned money is not a right, and if you are irresponsible, it's harmful. So if lending more to a certain segment of the population hurts the bank's profit, I'd also expect it to cause more problems for that population segment too.
- sam0x17 8y agoWhich is why we need regulation forcing you to do it
- sam0x17 8y agoFrankly, private industry has been lucky up until this point that anything other than your financial history has been allowed to factor into your credit score or credit worthiness __at all__. I wouldn't be surprised if it gets limited to solely financial factors by regulation within the next 10-20 years. In terms of regulations, I think by regulation they shouldn't be allowed to give the algorithms anything but loan amounts, payment schedules, and payment history. Don't give them locations. Don't give them age, name, race, or gender. Don't even give them the names of banks, since this too can be used in a discriminatory way that can be used to imply geographic location and thus race etc. Yes, people with no credit history will get terrible scores, but that's the point of a credit system. It should be based solely off of your merits and what you've actually done, not off of what people in your area/situation tend to do based on statistics. Then it's just statistics creating statistics, and socioeconomic mobility freezes
- Domenic_S 8y agoI'm not sure what you mean; are you saying an otherwise-creditworthy person could get denied a loan based on other factors?