As with many data-driven businesses, the companies are also inserting themselves into the most intimate spaces inhabited by their customers.
Loan officers filled them in with applicants’ information and totted up the results to see if they exceeded an acceptable level of risk.
The spread of the company’s scorecards attracted regulators’ attention.
The Equal Credit Opportunity Act () of 1974 made it unlawful for lenders to discriminate on the basis of sex or marital status.
In 1976 it was amended to outlaw the consideration of race, religion and several other characteristics.
“Good” loans, it turned out, were correlated with telephone-ownership, longer time at the same address, longer employment in the same job and the applicant’s age.
They set up a consultancy, Fair, Isaac and Company, whose product was a literal scorecard, made of cardboard, provided to banking and retail customers.Their rise not only greased the wheels of economic development but also presaged the arrival of the data-driven, algorithm-mediated economy of the 21st century.Now entrepreneurial companies are taking that blend of finance and technology to the developing world, drawing on new types of digital data to make credit decisions.The biggest revolution in credit-scoring came 15 years later.Working with Equifax, Experian and Trans Union, three credit bureaus that had come to dominate the market, in 1989 Fair Isaac unveiled the first consumer-credit score: a number between 300 and 850, where higher scores indicate a better credit rating.And there are THREE major credit bureaus that provide these reports: So if you’re planning on taking out a loan or attaining credit of ANY kind, you’re going to want to make sure your credit score is in check.