Chopra proposed that regulators, lenders, and other stakeholders collaborate to develop a new open-source model using AI, which could be understood by all parties involved. He suggested that this model could be financed through a cooperative model, ensuring it is non-discriminatory and transparent about key inputs. This, he believes, could promote competition and inclusion in a more open banking system.
Key takeaways:
- Consumer Financial Protection Bureau Director Rohit Chopra criticizes the FICO credit-scoring model, calling its shortcomings unacceptable and urging for a new model based on artificial intelligence.
- Chopra suggests that government agencies should rethink policies that steer lenders toward traditional credit-scoring methods and instead promote the use of AI for a more meaningful and transparent credit scoring.
- He highlights the issue of price gouging in credit scores, particularly in the mortgage origination market, and the need for actions to curb these costs.
- Chopra proposes the development of a new open-source model, using AI, that could be used by lenders, investors and others to standardize a score, ensuring transparency, fairness, and non-discrimination.