Credit Scores Go Behavioral

Will you take your medicine tomorrow?  You may not know but Fair Isaac thinks it does.

The company that invented the FICO credit score is now branching out and adopting some of the behavior-prediction methodologies used by Web advertisers, but with potentially more far-reaching effect.

After all, if you don't like a behaviorally-targeted ad, you can just skip it.  But Fair Isaac will be selling its new behavior scores to insurance companies, lenders and others whose decisions can have a big effect on your finances, your employment prospects and even your health.

The Medication Adherence Score is Fair Isaac's latest product.  It tries to measure the likelihood that you'll take your prescriptions on time.  How can it know that?  Good question. 

The company is understandably not very forthcoming about its methods but says it draws conclusions based on massive amounts of data it gathers about each of us, including such seemingly benign data as how long we've lived at the same address, whether we own a car, our marital status, employment, and so forth.

Can this be legal?

You might think this can't possibly be legal.  Well, so far it is.  In fact, some of the new scores don't even fall under existing laws that require credit-rating companies to disclose what they know about us.

That's not likely to last long though, as politicians and regulators are even now beginning to paw the ground and snort loudly as they get a whiff of what's afoot out in the wild world of data-gathering.

In fact, much of the data that Fair Isaac, Experian and other companies are gathering isn't even about us personally.  It's based on massive aggregations of data that, in theory anyway, tell us how people like us are likely to act.

For example, one new Experian score seeks to measure disposable income.  It doesn't go line by line through each household's income and outflow but bases its predictions on an analysis of large numbers of people whose situation is roughly equivalent.

Privacy advocates don't like any of this very much.  They say it's invasive and may not even be accurate.

But the credit companies say it actually "empowers" consumers by making it easier for lenders, employers and others to snoop around in our affairs.

That may be a tough sell if Congress ever gets around to putting on one of its show trials but for now, the business of nosing around in your affairs is booming.