Credit score as a loop in consumer credit relations

Abstract

Evaluating one’s creditworthiness is as old as human history. Social networks, social status, social class, gender, race side-by-side with financial statements have all been the relevant aspects of this evaluation process while face-to-face interactions and daily encounters have been the main catalysers. On the other hand, all above mentioned aspects and catalysers have come with certain defects, which could be too costly for creditors. After a dramatic increase in the number, the volume and the intensity of the personal borrowing relations has made face-to-face interactions either impossible or expensive for those responsible in sanctioning the personal loans, there emerged several problems in evaluating the customers’ creditworthiness. Thanks to advancements in science and technology, this problem has been tried to eliminate by a market device, i.e.credit score. By doing so the consumer credit firms wanted to balance the information asymmetry in their credit relations with their customers. The idea was simple: quantifying the evaluation process to get rid of the defects of face-to-face interactions and formalizing it by clearing its all-subjective biases. However, the credit score by getting the aid of information technologies has started to participate as anactantand take a performative role in the credit relations. A high credit score comes with dear credit terms for consumers while a low score comes with harsh credit terms, and even pushes consumers to the fringe creditors. Inspiring from the Actor-Network Theory which takes devices asactants in on-going network interaction of other relevant parties of a relation, and based on the data derived from in-depth interviews with the officers of Credit Record Bureau (Turkey), bank officers, and consumers this research seeks to understand how credit score creates loops for consumers.