Own an Android Phone? You Might Not Get That Loan
Algorithms could determine our creditworthiness based on data we didn’t know was available or relevant.
We all leave a trail.
Source: Geography Photos/UIG via Getty Images
I have great respect for Apple, but I refuse to buy its $1,000 phones. Instead, I use a $250 Android device with a long battery life. In the emerging big data-based economy, however, that could cost me in ways I can’t even predict.
A recent paper by Tobias Berg of the Frankfurt School of Finance and Management in Germany and his collaborators showed that a person’s digital footprint can be as predictive of financial behavior as a credit score. One of their findings, for example, is that the difference in loan default rates between iPhone and Android owners “is equivalent to the difference in default rates between a median FICO score and the 80th percentile of the FICO score.” iPhone ownership, apparently, is a reliable proxy for higher income and thus for creditworthiness.