McCarty

Card Set Information

Author:
ED_6C3
ID:
270314
Filename:
McCarty
Updated:
2014-04-12 14:10:13
Tags:
6C
Folders:
Credit Score
Description:
6C
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  1. Rating factors considered to be inappropriate:
    • life insurance used to have race as a rating variable, which was statistically significant
    • life insurance companies also considered the use of genetic testing
    • Florida raised the question of whether occupation and education was a proxy for race
  2. Weaknesses of the credit reporting system:
    • 50% of credit reports contain errors (improving)
    • identity theft
    • proliferation of access to credit
  3. Frequency and severity vs credit score
    • studies show no significant difference in magnitude of claims, but only on frequency
    • suggests that the frequency is the same across populations, but those with higher scores are less likely to file a claim
  4. Disproportionate impact of credit-based insurance scores:
    • analysis demonstrates a strong correlation between credit scoring and race/ethnicity
    • young people have worse scores because they didn’t establish a credit history
    • older people also have lower score because they tend to use credit less often
    • certain religions do not use credit
    • recent divorcees, immigrants, disabled are also penalized

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