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IMF wants credit scores to be based on browsing

by on20 August 2021

So that is most of the world stuffed

A post from the International Monetary Fund suggests that it would be a good idea to base your credit score on your browsing habits.

If the idea is followed, it could mean some serious changes in the way credit is obtained and mean you could be denied a mortgage based on what you were viewing.

Four researchers presented their findings from a working paper that examines the current relationship between finance and tech and sees the possibility of using the data from your browsing, search, and purchase history to create a more accurate mechanism for determining the credit rating of an individual or business.

The concept of using your web history to inform credit ratings is framed around the notion that lenders rely on hard-data that might obscure the worthiness of a borrower or paint an unnecessarily dire picture during hard times.

The researchers insist that it could result in greater lending to borrowers who might be denied by traditional financial institutions.

While this is probably the most scary takeaway from the paper, it would seem the IMF is more worried about the threat the institutional banking system is facing from tech companies like Google, Facebook, and Apple.  At the moment, 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.

Citing soft-data points like "the type of browser and hardware used to access the internet, the history of online searches and purchases" that could be incorporated into evaluating a borrower, the researchers believe that when a lender has a more intimate relationship with the potential client's history, they might be more willing to cut them some slack.

Such a system would use machine learning. The researchers acknowledge that there will be privacy and policy concerns related to incorporating this kind of soft data into credit analysis. And they do little to explain how this might work in practice.  It might also be harder to do in the future as browsers start storing less user data.


Last modified on 20 August 2021
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