Credit Scores: Performance and Equity
<|reference_start|>Credit Scores: Performance and Equity: Credit scores are critical for allocating consumer debt in the United States, yet little evidence is available on their performance. We benchmark a widely used credit score against a machine learning model of consumer default and find significant misclassification of borrowers, especially those with low scores. Our model improves predictive accuracy for young, low-income, and minority groups due to its superior performance with low quality data, resulting in a gain in standing for these populations. Our findings suggest that improving credit scoring performance could lead to more equitable access to credit.<|reference_end|>
@article{albanesi2024credit,
    title={Credit Scores: Performance and Equity},
    author={Stefania Albanesi and Domonkos F. Vamossy},
    journal={arXiv preprint arXiv:2409.00296},
    year={2024},
    archivePrefix={arXiv},
    eprint={2409.00296},
    primaryClass={q-fin.RM cs.LG econ.GN q-fin.CP q-fin.EC}
}