Credit Reports to Exclude Certain Negative Information, Boosting FICO Scores.

OK – not sure about this, but it has a distinct “deja-vu” feeling in my book – and if one has been in this business as long as I have, it’s clearly not pointing to anything good here.

The decision by the three major credit-reporting firms— Equifax Inc., Experian PLC and TransUnion—could help boost credit scores for millions of U.S. consumers, but could pose risks for lenders. The reports and scores often help decide how much consumers can borrow for a new house or car as well as determine their credit-card spending limit.

The unusual move by the influential firms comes partially in response to regulatory concerns. The three reporting bureaus rarely tinker with the information that goes on credit reports and that lenders consult to gauge consumers’ ability and willingness to pay back debts.

So let me get this straight. We’re going to make it easier for people to access credit (a good thing) by artificially boosting their credit rating (a bad thing)? Reminds me of the pre-housing bust period, where everybody and his dog got approved for NINJA loans, in the name of “democratization of access to housing”, and we’ve all seen what that has brought us. We’re still digging out of that one.

Maybe useful to read the latest Orchard stats on marketplace lending charge-offs by quarter as per the article here:

Source: Credit Reports to Exclude Certain Negative Information, Boosting FICO Scores – WSJ

Is it OK for lending algorithms to favor Ivy League schools?

This article goes deeper into the subject matter, and addresses a number of issues that are important indeed. In the long run though, it’s clear that this has only one way to go, and it’s a positive story. The human factor being what it is, there is always going to be a bias. Put more machines in charge, let them learn, and we’re off to a better credit world, no doubt. 

The main mantra used to be “software is eating the world”. Mine these days and going forward is “AI and Machine Learning is eating all the rest”. TGIF – but have a good read nevertheless.

“I think a baseline question is, how much disparate impact already exists in the system?” said Paul Gu, co-founder of the online consumer lender Upstart, which includes the potential borrower’s college in its underwriting criteria. “I think we would be kidding ourselves if we thought that the traditional way of underwriting was a completely unbiased way of underwriting. If you look at credit scores by any demographic, they’re extremely uneven. If you look at credit access in America, it’s extremely uneven.”

Source: Is it OK for lending algorithms to favor Ivy League schools?

From SoFi – with love …!

You know you’re making it Big when you’re on Mad Money with the Mad Hatter … Anyway, if there is one man that can get away with it in style it’s Mike Cagney – my favorite libertarian who’s getting us all back to basics on this quaint concept of “customer sercice” in the financial space. ‘Nuf said – just watch and enjoy and understand just why this thing is going gangbusters – and very likely to continue to do so for a very long time. It’s gonna be painful for a lot of people indeed…