But this is an argument against making any kind of predictions at all, as it could negatively affect some individuals. I don't see why that should be so, especially if it positively benefits everyone else a lot more and is a net benefit. For every person that loses one dollar, 500 people gain 50 cents.

To look at it another way, by not taking that data into account, you are making those 500 worse off. I don't see how that is preferable.

If we had a time machine to go into the future and see what loans would be paid back and which ones wouldn't, that would be ideal. But we can only guess. If our guesses aren't 100% accurate, are we saying we shouldn't try at all?