Your Credit Score Should Be Based on Your Web History, IMF Says

– Gizmodo

Rhett Jones shares his reaction to a recent IMF working paper suggesting financial institutions could create a more accurate credit rating formula using data like internet browsing, search and purchase history

While Jones is skeptical of the idea, and challenges its practicality, he also recognizes the motivation behind the working paper.

“At its heart, the paper is trying to wrestle with the dawning notion that the institutional banking system is facing a serious threat from tech companies like Google, Facebook, and Apple. The researchers identify two key areas in which this is true: Tech companies have greater access to soft-information, and messaging platforms can take the place of the physical locations that banks rely on for meeting with customers.”

Jones argues that such credit rating mechanisms rely on machine learning and would create “black boxes” of credit scoring that are no more transparent than such systems are today.

As it is, getting the really fine soft-data points would probably require companies like Facebook and Apple to loosen up their standards on linking unencrypted information with individual accounts. How they might share information with other institutions would be its own can of worms

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