CFPB Report Highlights Alternative Scoring Models

  • Written by John L. Culhane, Jr. for JD Supra

The CFPB’s annual fair lending report [click here for report] covering its 2018 activities has been published. [The report] does contain the following noteworthy information:

In September 2018, the CFPB held a symposium to address the issue of access to credit for consumers who are “credit invisible” – that is, those without an established credit history with the three national credit reporting agencies – and who therefore cannot be scored by most traditional credit scoring models.  In conjunction with the symposium, the Bureau released its third “Data Point” report focused on “credit invisibles.”  In our blog post about that report, we commented that the CFPB should encourage alternative scoring models that enable underwriting decisions to be made with respect to “invisible” consumers, and should refrain from heavy-handed application of the disparate impact theory with respect to such models.

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