Tackling Credit Fairness and Missed Business Opportunities with Reject Inference

One of the least expensive ways financial institutions can increase their credit portfolio profitability is by improving the accuracy of their approval mechanisms. “Reject inference” techniques help financial institutions to do just that, with implications for offering credit to women who would otherwise be unable to access it. 

People seek credit for personal, business, and educational purposes. Financial service providers (FSPs) evaluate these applications through algorithms, loan officers, or a combination of both. However, these evaluation methods can be susceptible to biases and errors, resulting in the unfair rejection of eligible applicants. 

Reject inference is a quantitative method that identifies individuals who may be creditworthy but were mistakenly deemed non-creditworthy during credit assessment processes. Women’s World Banking had the opportunity to conduct extensive research on improving reject inference techniques in collaboration with eight financial service providers. This report is the result of these partnerships.