Abstract
Credit scoring models have been widely applied by financial institutions, Peer to Peer (P2P) lending service providers, and Buy Now Pay Later (BNPL) service providers to evaluate their customers' financial status. Therefore, it has a large impact on consumer financing activities. However, unfair evaluation may occur as the development of credit scoring models contains biased judgments (e.g., racial bias), which deteriorates users' credit access ability. Thus, we study the feasibility of mitigating racial bias in developing a credit scoring model. By using a data set provided by a P2P lending platform, LendingClub, we integrated the C5.0 decision tree algorithm and the reweighing fairness algorithm to develop credit scoring models with cost-sensitive modeling concepts. Multi-class fair credit scoring evaluation was also studied in terms of performance indices, including accuracy, average cost, and unfairness metrics. The results demonstrated that the reweighing fairness algorithm reduced the unfairness and average cost of models. In addition, combining the fairness algorithm and cost-sensitive modeling minimized the average cost of models while maintaining the functionality of the fairness algorithm.
Original language | English |
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Title of host publication | 2023 IEEE 3rd International Conference on Electronic Communications, Internet of Things and Big Data, ICEIB 2023 |
Editors | Teen-Hang Meen |
Publisher | Institute of Electrical and Electronics Engineers Inc. |
Pages | 100-105 |
Number of pages | 6 |
ISBN (Electronic) | 9798350333862 |
DOIs | |
State | Published - 2023 |
Externally published | Yes |
Event | 3rd IEEE International Conference on Electronic Communications, Internet of Things and Big Data, ICEIB 2023 - Taichung, Taiwan Duration: 14 04 2023 → 16 04 2023 |
Publication series
Name | 2023 IEEE 3rd International Conference on Electronic Communications, Internet of Things and Big Data, ICEIB 2023 |
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Conference
Conference | 3rd IEEE International Conference on Electronic Communications, Internet of Things and Big Data, ICEIB 2023 |
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Country/Territory | Taiwan |
City | Taichung |
Period | 14/04/23 → 16/04/23 |
Bibliographical note
Publisher Copyright:© 2023 IEEE.
Keywords
- credit scoring
- decision tree
- fairness algorithm
- p2p lending