How can AI be used to improve credit scoring?

cointelegraph.com:

Artificial Intelligence (AI) can be used to improve credit scoring in a number of ways. Credit scoring is the process of assessing a borrower’s creditworthiness based on their credit history, financial data and other relevant factors. Here are some ways AI can improve credit scoring:

AI can analyze large volumes of data from a variety of sources to identify patterns and trends that might not be apparent to human analysts. This can help lenders make more accurate predictions about a borrower’s creditworthiness. The below steps illustrate how AI can be used for data analysis:

AI can be used to build predictive models that assess the likelihood of a borrower defaulting on a loan. These models can take into account a wide range of factors, such as income, debt-to-income ratio and payment history, to better predict the risk associated with lending to a particular borrower.

The general steps followed by lenders to assess borrower’s suitability for credit are listed below:

AI can help reduce bias in credit scoring by using objective criteria to assess creditworthiness. This can help reduce the impact of factors such as race, gender and ethnicity on lending decisions.

One of the challenges in credit scoring is ensuring that the process is fair and free from bias. Historically, lending decisions have been influenced by factors such as race, gender and ethnicity, which can result in discriminatory practices. However, with the use of AI, it’s possible to reduce the impact of these factors on lending decisions.

I also mentioned the aspect of fairness under the ethical considerations of using AI, while we are looking at using AI for credit scoring @SociaLendAfrica, we will maintain the human review process. Even AI can be biased by the