The terms of the next loan you get might depend less on your credit score and more on what a computer program thinks of your habits.
Digital lending is expected to double in size over the next three years, reaching nearly 10 percent of all loans in the U.S. and Europe. There are now some 2,000 digital startups, many of which are using artificial intelligence to analyze the troves of data created every day.
"In 10 years, there will hardly be a credit decision made that does not have some flavor of machine learning behind it," says Dave Girouard, the CEO of Upstart, an online lender. "The variables we're introducing to this model actually are reducing the bias inherent in most lending systems. And that's just one way we're actually expanding access to credit."
If artificial intelligence can weed out good borrowers from bad just by looking at things like Web browsing history, suddenly it doesn't matter if you live in a low-income neighborhood or your family just immigrated. But it does open the door to new, 21st century versions of redlining.
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