Question

ethics issues

It is illegal for companies to use credit scoring models that apply inputs based on such factors as race, gender, or geographic location.( why)?

Why do you think such inputs are deemed illegal?

Beyond legal issues, what are the ethical and business reasons for excluding (or including) such factors?

Answer 1

Yes, it is illegal for companies to use credit scoring models that will apply input based upon factors such as race,gender ,and geographical location because it is discriminatory credit scoring model as it is not dependent upon the fundamental of credit scoring rather it is discriminating a certain section of society and promoting the Other section of society, so it will be unjust to the principle of equity and it will not be legal in nature.

These inputs are deemed illegal because factors like race and gender and geographical location are deemed to be highly derogatory and discrimination based upon these factors will be leading to promotion of unethical practices so these are deemed to be illegal because they are also violating the principle of equality.

I think there are various business reasons and ethical reasons for excluding such factors as this will be leading to a smaller market share if these factors are included because they are discriminatory in nature and this will be leading to to a bad business reputation and a bad policy monitoring so it will be unethical in nature and business will not be able to cater to those customers who are actually creditworthy and they will be trying to distinguish based upon other factors which are unethical and derogatory.