3 ms·
I'm not a fan of the traditional credit reporting system. It is often a black box that makes it difficult to understand how the actual credit scoring algorithm
by slg 6y ago
I'm not a fan of the traditional credit reporting system. It is often a black box that makes it difficult to understand how the actual credit scoring algorithm works. Although one of the important aspects of the current system is that all the inputs are known. We don't know exactly to what degree each input matters, but we know the inputs. A new system needs to keep that aspect or else is going to cause pain for a lot of people who are financially punished without being aware of why. This type of transparency is also important for fairness. As other commenters have mentioned, some traits like race would be a good indicator of credit worthiness due to a variety of systemic socioeconomic issues. However that is generally considered unfair and is illegal to take that into consideration.
- lmohseni 6y agoImportant to consider that credit scores weren’t a thing until 1989
- sokoloff 6y agoThat is the content of a meme circulating recently which is imprecise at the most charitable (and IMO pretty close to entirely wrong) Engineer Bill Fair and mathematician Earl Isaac (the “F” and “I” in FICO) started their company in 1956 and had a bank credit card scoring system available in 1970. Equifax was founded in 1899 (not a typo). The original name: “Retail Credit Company”. https://www.opploans.com/blog/a-brief-history-of-credit-scores/ https://www.opploans.com/blog/a-brief-history-of-credit-scor... https://www.myfico.com/consumer-division-of-FICO.aspx https://www.myfico.com/consumer-division-of-FICO.aspx