Saturday, July 04, 2009

Another reason not to brag...

About your FICO score.

Yet others have found that there are significant limits to the rationality of personal lending, which is encumbered by many all-too-human prejudices and idiosyncrasies. For example, my colleague Enrichetta Ravina has documented that there is a massive beauty premium—i.e., cheap loans for pretty women—enjoyed by Prosper borrowers, despite the fact that better-looking people are in fact more likely to default on their loans. Economists Devin Pope and Justin Sydnor find that racial discrimination also taints the online loan market—black borrowers are much less likely to obtain funding and more likely to pay higher interest rates relative to otherwise-similar whites looking for financing. [More] [My emphasis]

It makes me wonder how I get any credit at all.

[via curious capitalist]

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