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New scores aim to predict consumer behavior

By , CardRatings contributor
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Your public records could help tell your doctor whether you're likely to take your medication on time, according to researchers at the country's most prominent credit scoring agency. According to a Wall Street Journal report, FICO has launched a new consumer rating system based on the information collected from public agencies and courthouses.

The "Medication Adherence Score" attempts to do for health care what the FICO Score has done for instant approval credit card offers. FICO's algorithm looks at factors including length of employment and auto ownership to determine whether a patient is statistically more likely to follow a doctor's treatment plan.

Proponents of the new score suggest that doctors can use it to follow up more aggressively with patients who might forget or neglect their medication. Detractors claim that insurance companies might raise rates on subscribers with low scores, and that errors in credit history could result in FICO's algorithm miscalculating scores.

Statistical credit reporting skirts privacy rules

Wall Street Journal reporter Scott Thurm found that credit reporting bureaus have started relying more on statistical aggregates instead of sourcing expensive government data such as tax forms and benefit claims. Using computer models based on anonymized data may help credit bureaus circumvent laws related to credit report disclosure and credit scoring accuracy.

Some insurance companies already use credit reporting to determine rates for auto, home and life insurance polices, claiming that high debt and credit card delinquency are often correlated with higher risk of accidents and illness.

New scoring systems have also attracted attention from large employers, who claim that credit reports offer insight into a candidate's trustworthiness. Lawmakers in a handful of states have already moved to restrict companies from reviewing credit reports for the purpose of determining employment eligibility. However, state and federal agencies have yet to address the legality or the ethics of using derivative scoring models that draw on aggregated instead of specific consumer information.

Correction, Nov. 14, 2011: A previous version of this article mistakenly reported that credit card payment information could influence FICO's Medication Adherence Score. FICO representative states that the MAS uses absolutely no credit or financial information, and that Medication Adherence scores are completely unrelated to FICO scores.

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