Landing Credit

In chapter 8 of Weapons of Math Destruction, written by Cathy O’Neil, she talked a WMD score system, FICO. FICO score was fed by a formula that looked only at a borrower’s finances, which are mostly debt load and bill paying record. It also” predicted risk far more accurately while opening the door to millions of new customers” according to Cathy O’Neil. Cathy O’Neil said the model to be a “clear feedback loop”, it shows the credit companies with the borrowers’ default on their loans, and if the borrowers have high score, they seem to be defaulting on loans more frequently than the model would predict. The credit score is also relatively transparent, which on its website there are simple instructions on how to improve your score. The credit-scoring industry is also regulated, meaning that you have legal right to ask for your credit report. This score helps people earn credits, allow them to have loans according to their ability, and find jobs more easily.

In the chapter, Cathy also talked about the ways that the big data companies are able to access our financial status. She mentioned about “E-scores”, which she said it relies on a veritable blizzard of proxies instead of more relevant data, especially based on classes of people rather than on the individuals. The e-scores forms a negative feedback loop that it makes the poor people and coloured people harder to escape poverty.

I think the biggest takeaway from this chapter is that WMD can be beneficial if modelled appropriately. In this chapter, we can see how FICO positively influenced the money borrowers and the lenders. Instead of forming a vicious cycle, this WMD brings good to the society. More WMD like this should be designed and applied to other fields as well in order to maximize social benefit and form a healthy relationship between WMD users and their target audiences.