She continued: "On the one hand, scores are more objective than the prior system where everything was judgmental, but the other hand, they’re sort of a blunt approach."
A Quest for Something Better
Getting back to the original question: Are credit scores fair? Some credit experts suggest it's more important to analyze whether or not scores are doing what they're supposed to do as best they can.
"I think the word fairness sort of startles me," Feddis said. "Why is it not fair to use somebody’s past history? ... It may be unfortunate sometimes, but to say it’s unfair is a real stretch."
As far as addressing those unfortunate situations, there are a lot of parties interested in making the system better. There's competition between scoring companies like FICO and VantageScore, which means that both companies are incentivized to create scores that calculate risk better. They both want to be known as the most predictive scores, which is why they either have updated their scoring models, or plan to. It’s also why there are so many new credit-reporting companies, like eCredable, who are fighting to get their data incorporated into credit scores. In addition, the Consumer Financial Protection Bureau is dedicated to making sure credit reports accurately reflect the consumer’s history and, as a result, contribute to accurate credit scoring.
Ed Mierzwinski, federal consumer program director and senior fellow for U.S. PIRG, hopes the CFPB spends a lot of time looking into credit bureaus and credit scoring, since the CFPB has the ability to look deeper into these industries than any federal agency before it.
"If they are using procedures that limit the opportunities for some kind of consumers, they should be held accountable for that," Mierzwinski said. "You can choose your bank or credit union, you can choose your card company, but you cannot choose your credit bureau, which is even more reason they need to be held accountable."