Blog 10 Collateral Damage: Landing Credit

Cathy O’Neil talks about how banks used to operate. Local bankers used to know all about your life. They would hear stories about you, what people said about you, know your race and ethnic group, along with the numbers on your application form. They would know about your church going habits, the stories about your older brother’s run-ins with the law, and what your boss said about you as a worker. These factors would usually make their way into the banker’s judgement. This led to millions of Americans being locked out of any opportunities. Eventually, a model called FICO came into play that improved things. The model evaluates the risk that an individual would default on a loan. It would only look at a borrower’s finances. The score given to people was color blind, and also very good for the banking industry. It opened the door to millions of new customers, since the model was so much more accurate at predicting risk. It was much easier for people to get credit, loans, and jobs. Since this model was made, it has been expanded on greatly. Today, we are looked at in every possible way that a statistician can use. These pseudoscientific models try to predict the creditworthiness of people, which results in e-scores. E-scores are very rarely seen, yet play such a huge role. The open doors for some, while shutting them on others. Unlike FICO scores, e-scores are not regulated and are often unfair. It has made things much more difficult for people to get credit, loans, and jobs once again. This model providing e-scores needs a human eye to look at it. Only a human can see the context, common sense, and fairness that a model cannot see. There is no easy way for people to deal with this. My biggest takeaway from this chapter is how far WMD’s reach in our society. They reach every corner of our daily lives, which is depressing to think about.