Basing credit decisions on data mining apps in the US

[jnicho02]

I heard something about there being rules in America that limit the use of data mining applications in the judging of credit applications (probably a neural net).<br>
Is this true? and if so, what are the restrictions?

 

[Predictor]

I don't know, but a data mining tool vendor once told me that one of their customers (who was a lender) had a problem with using a neural network) because supposedly if one rejects a loan application in the United States, a reason has to be given. I have no idea whether this is true or not, but it may be worth looking into.

 

[jnicho02]

Thanks for the reply Predictor. As you can see, i've been waiting for a long old time for any response!

I think that you are probably correct. My home ---->

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[Predictor]

For what it's worth, the customer in question was said to have gotten around the legal problem by building several extra neural networks, each predicting a specific, legally-allowed reason for denying a loan.