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FICO is a Product, Not a Virtue Signal

The score was a fluke, I figured. The impact of a career change that took me from a regular paycheck to a lumpy, unpredictable income would not have had time to percolate through the system yet.

Seven months later, the score has flatlined at that impeccable 850, while I remain unemployed in the traditional sense. I’m working some (I’ll get paid for this article, for example), but mostly I’m reading a lot, trying to figure out my novel and slowly draining my personal savings account. While I certainly understand that the score takes in a range of factors that have been following me around since I filed my first tax return in 1993 for $170, at the moment, I am not an “exceptional” borrower, as the rating would suggest. In fact, when my husband and I recently refinanced our home, our lender declined to use my information outside of what is required by law. I don’t have enough income to be counted as part of the refi; I’m simply listed as a spouse.  

I am not an “exceptional” borrower, as the rating would suggest.

FICO—a product of a publicly traded company that in 2017 clocked more than $932 million in revenue—feels more like a commentary on how easy it is for someone to manage their bills, not how hard they work at it. On their website, FICO frames themselves as a service that “helps lenders make accurate, reliable and fast credit risk decisions across the customer lifecycle. The credit risk score rank-orders consumers by how likely they are to pay their credit obligations as agreed.” 

Easy is a lot of things, from the availability of funds to having an uncomplicated financial life. It’s also an indication of having opted-in to the system. Why the hell had I been filling a tax return at 14? Because my mother (who, it should be said, spent some portion of her career in commercial lending) must have told me to do so, and having someone to provide education and guidance is a privilege in itself. 

As a younger person, I was always employed full-time, and I sometimes held two jobs because I was trying to deal with student and credit card debt while earning a low wage. I worked much harder to manage my money then; I checked my bank account every day and paid very close attention to when things like car insurance were due. My FICO score was also under 600. A “risky” borrower.

Now I am 41 and more likely to be valued by financial institutions—whether they ought to or not. A human lender, like my mortgage broker, can see where the hole is, but FICO, by their own count, still influences billions of decisions each year.

Having someone to provide education and guidance is a privilege in itself.

In his recent book Ultimate Price: The Value We Place On Life, the health economist Howard Steven Friedman looks deeply into the structurally problematic factors that impact the price tags Americans are given for our lives. He argues that the methodology used to define the value of individuals is neither transparent nor fair.

While this may not feel like news, Friedman effectively makes his case from the perspective of the data scientists and economists whose tabulations convert humans into dollars.

Ultimately, the price tag concept impacts everything from when someone starts to get denied medical coverage, having met their lifetime maximums; the severity of punishments, which are nearly wholly economic, meted out by civil courts; to whether or not state and federal entities consider the Value of a Statistical Life (VSL)—part of the baseline measure that helps determine Friedman’s price tags—significant enough to enact and enforce regulations, like those for clean air and water.

Many of us go through life with little understanding of how price tags like FICO are calculated, even though there are major ramifications in our lives and our world.  

This impacts the steps we take to protect life, as well as the answer to the question: Whose life? Katherine Standefer’s memoir Lightning Flowers: My Journey to Uncover the Cost of Saving a Life, forthcoming in November, asks: What if a lifesaving device causes loss of life in the supply chain? What, then, is the real cost of the cardiac defibrillator that keeps her heart beating? Hers is a deeply personal exploration of Friedman’s argument, illustrating how VSL creates winners and losers.

It’s disingenuous to suggest that any algorithm, methodology or calculation that places value on human life is (or could ever even be) neutral.

Which brings me back to FICO, which says they do not consider race, color, religion, national origin, sex and marital status in their calculations. As is demonstrated in the narratives and research of both Friedman and Standefer, it’s extremely disingenuous to suggest that any algorithm, methodology or calculation that places value on human life is (or could ever even be) neutral. 

FICO picks up where the actuaries, economists, manufacturers and healthcare companies leave off, compressing every data point into a measurable distillation of how well we are performing capitalism. My score suggests I’m doing pretty well, despite being materially unemployed! I’m also white and married, and my art school degree is a master’s. I live in the middle of the U.S., in Denver, and am childless by choice. This impacts my ability to qualify for a mortgage or rent an apartment without a cosigner; it also means less advantageous credit-based insurance rates.

Friedman argues that human life has to be priced high enough for us to care about protecting it, and that we have to adjust the way we measure value in order to reach equitable outcomes. When organizations like FICO earn a profit from aggregating and selling our personal data, it’s hard to see how to get there. 

The FICO score as we know it today made its debut in 1989, the same year the Berlin Wall fell. Perhaps Mark Zuckerberg was inspired by the engineer and the mathematician who pioneered this early data analytics company. This metric is perhaps even more embedded in our financial lives than Facebook. It’s easy to forget that FICO is a product that is sold, just like Standefer’s cardiac defibrillator and the tables of data key to Friedman’s analysis. 

None of it is a measure of virtue nor a true indicator of success, skill or even competency. Rather, it’s a commodification of behaviors that reflect access to healthcare or financial literacy resources. This, paired with the monetization of shady algorithms, only ensures that we are kept in the dark when it comes to the real costs and the perceived worth of our own lives.

→ Read Elizabeth Gonzalez James’s essay about how unemployment is depicted in literature.

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