‘Back in the day’ I did the marketing research for BankAmericard; now called Visa. Their problem at the time was a loss ratio of 5%. High for personal loans by banking standards. My job was to find the ‘bad actors.’
In those days we had computers but they were fed by punch cards. So I took several handfuls of good credit customers and fed them into the machine. I took a small handful of the bad credit users and fed them into the machine. Then I looked for the predictors that showed a difference between the two sets of customers.The bad credit customers had two distinct patterns. Most didn’t have a home phone; this was back when 15% of the population didn’t have a phone and they also were the ones who used their credit cards at grocery stores.
Those elements were used to create a credit score. Low scores could no longer get the BankAmericards or had their cards cancelled.
With modern day Ai and hundreds of data points to look at, we can expect very fine scoring systems to identify all sorts of qualities that will determine credit, insurance, health treatment, high product returners, and a wide range of controls and restrictions will be put on people.
In China, where the scores are public, people with the lowest scores are not even allowed to travel by train.
Such scoring systems, like the one I created, are immoral. They assume that people don’t change or can’t change and are therefore permanent life stigmas. The scarlet letter.