Credit scoring systems in the United States have garnered considerable criticism from various media outlets, consumer law organizations, government officials, debtors unions, and academics. Racial bias, discrimination against prospective employees, discrimination against medical and student debt holders, poor risk predictability, manipulation of credit scoring algorithms, inaccurate reports, and overall immorality are some of the concerns raised regarding the system. Danielle Citron and Frank Pasquale list three major flaws in the current credit-scoring system:
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| - Criticism of credit scoring systems in the United States (en)
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| - Credit scoring systems in the United States have garnered considerable criticism from various media outlets, consumer law organizations, government officials, debtors unions, and academics. Racial bias, discrimination against prospective employees, discrimination against medical and student debt holders, poor risk predictability, manipulation of credit scoring algorithms, inaccurate reports, and overall immorality are some of the concerns raised regarding the system. Danielle Citron and Frank Pasquale list three major flaws in the current credit-scoring system: (en)
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| - Frank Pasquale (en)
- Jackie Wang (en)
- Jonathan Cinnamon (en)
- Marion Fourcade and Kieran Healy (en)
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- Inability to secure a loan, mortgage, job, or health insurance due to inaccurate placement in a ‘risk’ category is clearly unfair, however the accuracy of the classification is perhaps unimportant in the context of social justice—accurate or not, personal scoring systems ‘make up people’ ; they produce new social categories of difference and restrict our ability to shape our own sense of self, a clear threat to parity of participation in social life. (en)
- Predictive scoring may be an established feature of the Information Age, but it should not continue without check. Meaningful accountability is essential for predictive systems that sort people into "wheat" and "chaff," "employable" and "unemployable," "poor candidates" and "hire away," and "prime" and "subprime" borrowers. Procedural regularity is essential given the importance of predictive algorithms to people's life opportunities-to borrow money, work, travel, obtain housing, get into college, and far more. Scores can become self-fulfilling prophecies, creating the financial distress they claim merely to indicate. The act of designating someone as a likely credit risk raises the cost of future financing , increasing the likelihood of eventual insolvency or un-employability. When scoring systems have the potential to take a life of their own, contributing to or creating the situation they claim merely to predict, it becomes a normative matter, requiring moral justification and rationale. (en)
- Nowadays, credit scores have a number of often invisible effects on our lives. Credit scores are often used for hiring purposes because employers believe that credit scores are a reliable way to index a person's level of responsibility. Yet considering that medical debt is the most common cause of bankruptcy in the United States, and that there are racialized structural barriers to accessing nonpredatory forms of credit, it is outrageous to use credit scores as a way to measure someone's personal character and make moralistic judgments about them. You could have a terrible credit score simply by being an uninsured black or brown person who gets into a bicycle accident. In short, using credit scores to punish poor people exacerbates already-existing socioeconomic inequalities. (en)
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| - Credit scoring systems in the United States have garnered considerable criticism from various media outlets, consumer law organizations, government officials, debtors unions, and academics. Racial bias, discrimination against prospective employees, discrimination against medical and student debt holders, poor risk predictability, manipulation of credit scoring algorithms, inaccurate reports, and overall immorality are some of the concerns raised regarding the system. Danielle Citron and Frank Pasquale list three major flaws in the current credit-scoring system: 1.
* Disparate impacts: The algorithms systematize biases that have been measured externally and are known to impact disadvantaged groups such as racial minorities and women. Because the algorithms are proprietary, they cannot be tested for built-in human bias. 2.
* Arbitrary: Research shows that there is substantial variation in scoring based on audits. Responsible financial behavior can be penalized. 3.
* Opacity: credit score technology is not transparent so consumers are unable to know why their credit scores are affected. The scoring system has also been critiqued as a form of classification to shape an individuals life-chances—a form of economic inequality. Since the 1980s, neoliberal economic policy has created an inverse correlation between the expansion of credit and a decline in social welfare—deregulation incentivizes financing for the consumption of goods and services that the welfare state would alternatively provide. Credit scoring systems are seen as scheme to classify individuals creditworthiness necessitated by the loss of these collective social services. The credit scoring system in the United States has been compared to, and was the inspiration for, the Social Credit System in China. The use of credit information in connection with applying for various types of insurance or in landlord background checks (for rental applications) has drawn similar amounts of scrutiny and criticism, because obtaining and maintaining employment, housing, transport, and insurance are among the basic functions of meaningful participation in modern society, and in some cases (such as auto insurance) are mandated by law. (en)
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