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.”