Insurance Credi Scoring: An Ethical IssueWritten by Richard D. Schrader
The issue at hand is use of a consumer’s credit score as an underwriting tool for auto insurance rates. What is a credit score or FICO score? A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining likelihood that credit users will pay their bills. Fair, Isaac began its work with credit scoring in late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrower’s credit history into a single number. Fair, Isaac & Co. and credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.
Isn’t it interesting that score most important in our financial lives, our consumer credit score does not even contain full disclosure? As stated above Federal Trade Commission has ruled that it is ok for Fair Isaac & Co not to disclose algorithms used in this process, but what about consumer rights. While it is important to understand what a FICO score is, it is not main issue of this paper, insurance rates are. So where is connection? All public knows is that Fair Isaac tells us there is a high correlation between people with bad credit and high risk drivers. This notion is insane and from what I can see from this black box approach, there is no real causation between two. This type of reasoning is similar to convicting a person of something before they have even committed a crime. For instance, let’s say I do a study and that study shows there is a high correlation between criminals and people with bad credit. Is this to say that just because you have bad credit you are more likely to commit a crime and therefore you should be profiled or perhaps locked up because you are a risk to society?
This system is discriminating against minorities, disabled and in my case college students among others. Fair Isaac & Co claims that they cannot show sophisticated algorithms they use to calculate these correlations and scores because they fear that they would be giving up valuable proprietary information that was very costly to develop and maintain. What about cost to consumer’s who may be paying higher rates or in worse cases even denied insurance based on these practices.
The Equal Credit Opportunity Act forbids creditors from considering race, sex, marital status, national origin, and religion, but if we don’t even know how these companies are calculating these scores, how in world could we possibly know whether or not they are discriminating. This smoke and mirror approach is what many government agencies do to subtly discriminate and extort money from American.
What about extortion? As I reflect on this topic extortion comes to mind. Webster defines extortion as to “obtain by force or compulsion.” By using such unfounded tactics consumers are forced into paying higher rates. First of all, 90% of all insurance companies use this procedure; secondly in interest of society legislation requires all Americans with cars to have car insurance. Living in a country where it is virtually impossible to live without a car doesn’t this present some force to pay rates? Also, lets say you cannot afford to buy a car with cash, in which case you could obtain liability insurance alone and save quite a lot of money; but instead you take out a loan, bank will require you to obtain full coverage auto insurance to cover them until you pay off loan. While this case may not represent an extreme case of extortion it does give reason to ponder connection.
Importance of your job search!Written by Paul Debognies
Importance of your job search by Paul Debognies More Details at: http://www.career-builder-information.com
Importance of your job search Copyright 2004 by Paul Debognies / Career Builder Information So that you can decide just how critical your job hunt is in your total life scheme, let's put a kind of frame around importance of effort ahead. Reflect on it. A job is not just a job. Half of you waking hours are devoted to it. Its quality ramifies through all other aspects of your life. It determines your productivity and how far you will go in achieving full self-realization. It governs your happiness, happiness of your family, where you live, and how well. The quality of job you land now will inevitably affect quality of your next one. It will even determine kind of education and opportunities your children will have and, consequently, their future prospects. Not to mention whether your retirement years will be beautiful or bleak. With all that and so much more hanging on outcome, good sense says you should proceed with your job-finding campaign as though your life depends on it. In fact, most of it does. When you get right down to it, aiming for a really good job doesn't require more effort than setting your sights on a poor one. And aiming high leaves you in far better control of outcome. Consequently, it is plainly your duty - your duty to yourself, your family, your new employer, even to society – to proceed with your job search in ways that will produce work as close as possible to peak of your abilities and at highest possible pay. Yet, few job seekers – even though their careers, their lives, are on line – sense that such urgent considerations require a carefully planned approach. And, unhappily, it is generally not in interest of people who know better – employment agencies and other applicant services – to show them a better way. So that you will know what to avoid and strong advantage you will have if you plans your approach, it is important to understand this: Most people – and that includes others who want job you want – do a very poor job of job finding. In absence of adequate guidance, their only alternative is to cast about in job market while painfully learning lessons by trial and error that have already been painfully learned, at least in some small parts, by tens of millions of applicants before them – at a great cost of time, money, morale, and employment. Virtually all make critical – and entirely avoidable – mistakes, mistakes that delay day when they are hired. Now perhaps you are one of many recent unfortunate who have been downsized by their company, or maybe you are beginning a job search so you can enhance your career. Which ever case may be, looking for employment in today's highly competitive job market is not easy. There are so many good candidates competing for same position today, that landing your "dream job" is becoming more and more difficult. That being case, when an opportunity arises where you are called to go on job interviews, you need to be ready, and fully prepared. The employment interview is by far, single most important step in landing a job. So, you have to be sure that you do well when answering tough interview questions, because if you don't, you will not get a second chance.