Credit score has a regulated scoring system. It's all based on your debts, and repayment of said debts. You're not going to lose credit score based on your vote.
If the score can includes factors that increase the odds of positive ROI, that is better for the lender. There is no incentive to make a “biased” score as that would create a market opportunity for someone else. Scores are built to whatever is allowed by regulation or lack thereof.
Maybe what you are criticizing is a particular input in that calculation? I notice you don't mention repayment of past debts, for example.
My "credit score" exists for 30 minutes while my bank gets my proof of income and ID, and that's it. In the same way, my landlord does not get access to any of these files, because it's none of his business. It is illegal to keep track of individuals like this. In the US, this incentivizes keeping individuals in poverty, and its ease of access means that it is easy for any predatory lending institution to explicitly target people with low credit scores. It creates de facto castes.
https://www.federalreserve.gov/econres/notes/feds-notes/are-...
As shown in the three panels, credit scores are distributed over the entire support for all three income groups, and, apart from the distribution of the high-income group having a larger mass at the high end of the distribution support, the shapes of the histograms of high- and middle-income groups are broadly consistent. Indeed, even among the high-income consumers, a significant mass of consumers have credit scores lower than 680, commonly known as "nonprime" or "subprime" borrowers.
Nor does any score in the US - none of the inputs, even bankruptcy, last more than several years.
> In the same way, my landlord does not get access to any of these files, because it's none of his business
Your reliability in paying definitely seems like it would be their business.
> In the US, this incentivizes keeping individuals in poverty
This is not supported by the data.
Hahahaha, that's a fantasy.
I got in a motorcycle accident at 18, and had to learn to walk again. You know what I couldn't do during that time? Pay my bills because I couldn't work. You know what I can't get despite making six figures these days? A decent credit card, a car, or a house. I have to pay cash, because going bankrupt at the literal beginning of your life, follows you for life.
Sure, the inputs are gone, but the evidence is there. When you go bankrupt and finally get back on your feet and can get credit again, there are only certain types of credit you can get. Eventually, the original negative inputs go away, but the types of credit still tell the same story. It can take decades before you are able to wipe away most of the evidence and get treated with some modicum of trust.
Ah, it's all good then, the completely arbitrary score handled by private companies reselling data on your every move only exists for seven rolling years.
>Your reliability in paying definitely seems like it would be their business.
Nope. It's law enforcement's business. If I do not pay, they go see the police, and a judge will handle it if necessary.
>This is not supported by the data.
Yes it is.
https://socialchangenyu.com/review/credit-reportings-vicious...
In most of the US failure to pay rent (and virtually all debts) is not a crime.
Will you? We don’t know. It’s not unheard of for people to make lots of money and also avoid paying debts. And thus we need to know your payment history.
Similarly, even if you have a poor debt to income ratio, it might not matter much if you have a long history of always paying your debts on time no matter what. And that’s how poor people get to have nice things.
Sounds great. The lending of money is the root cause of so many of modern society's ills.
There have been many attempts to ban lending. The result is always a fairly non-functioning economy.
For example, in most businesses, there is a disconnect between when the payroll must be paid, and accounts receivable get paid. This disconnect is taken care of by having a line of credit. You pay the payroll on credit, and pay off the credit when accounts receivable get paid.
You, on the other hand, want rich people to hoard money.
The money is not really liberated, it is duplicated. When that money is put to use by lending it out, it literally creates new money out of nothing. There's money in your account and that same money is simultaneously lent out to others. This massively inflates the money supply, devaluing the currency. Printing of currency is insignificant next to the power of loans.
It's why things like startups are a low interest rate phenomenon and I wouldn't be surprised if it was the real reason why there were massive layoffs the second the US federal reserve raised interest rates: less loans means less free money for corporations to spend.
> You, on the other hand, want rich people to hoard money.
Of course. I too would like to be able to hoard money. Right now it would be irrational to do so since it would be inflated away to zero. We should all be able to simply amass wealth without having to perpetually chase investments to protect against the inflation caused by the sheer existence of those same investments.
No, the root cause is scarcity, which also manifests in other ills.
Lending is simply one strategy sometimes used when scarcity happens.
For example, consider a lone shipwrecked man who starves to death on a desolate island. That isn't a tragedy of lending--which is not merely absent but impossible--but a tragedy of scarcity.
For instance, if people in location X tend to be bad at paying back their loans, I still don't think it should be legal to purchase location data from some weather app and then incorporate the amount of time someone's phone spends in location X into some creditworthiness score. One might argue that allowing this practice makes credit more accessible for everyone else because we don't have to comingle with all the people in location X, but I still think it should be a prohibited practice (and it is - in the US).
In developing countries with little regulatory sophistication, the law is simply not ready to deal with these things - they are busy dealing with murders, drug dealing, etc., not consumer finance.
The truth is it isn’t. Anything that helps the lender feel they are reducing their risk in lending will allow them to accept lower interest rates.
Of course, for a person that has no choice but to be in location X, this sucks as the data will suggest lending money to them at a higher rate due to greater perceived risk, but it’s tough to argue with data.
And suppose a location has been found with above average risk. To compensate, we increase interest rates in that area... making it more likely that people are unable to repay their loans, making the area more risky, increasing interest rates... the risk estimation algorithm essentially becomes part of enforcing and maintaining existing economic inequality.
If those people at said particular location _actually_ does not have higher risk, but is only higher due to their location association (e.g., their job is secure, etc), then an enterprising lender could find that out, and thus get the business from those people at a lower interest rate. This would be a form of arbitrage - they will steal marketshare from another lender who is unwilling to lend at the lower rate.
If members of a certain race consistently don’t pay debts in a way that is statistically significant, then it would be prudent to lend to them at higher interest rates due to perceived risk. Sounds racist, but reality has no obligation to conform to our ideas of racial equality. Races can develop habits and cultures amongst themselves that produce certain emergent behaviors. I think arguing against this just makes you seem naive.
In the above example, you are more than welcome to ignore race and lend money to everyone at the same interest rate regardless of race, but I predict you will see worse returns. Reality is what still exists even if you close your eyes and ignore the data.
What about developing their "clean" model by minimizing errors between it and the actual model? The clean model wouldn't contain any regulated inputs but will be as close as you can get to the real thing.
What's the difference, effectively?
> In addition to dishonest and fraudulent financial behavior, there has been proposals in some cities to officially list several behaviors as negative factors of credit ratings, including playing loud music or eating in rapid transits,[68] violating traffic rules such as jaywalking and red-light violations,[76][83] making reservations at restaurants or hotels, but not showing up,[86] failing to correctly sort personal waste,[96][97][81]
I have no idea why you thought this link would help you make your case. Human rights organizations the world over criticize the social credit score: https://ohrh.law.ox.ac.uk/the-human-rights-implications-of-c...
the social credit myth has been busted plenty of times. it's a cursory search away.
Pretty sure Chinese citizens don't worry about this either.
> It's all based on your debts, and repayment of said debt.
Absence of credit history is based on your debt (or more specifically lack thereof).
It might be non-obvious but the phrasing wasn't deceptive or "clever", it's the system that's weird.