Credit Scoring Model
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A Credit Scoring Model is a scoring model that predicts an economic entity's credit score.
References
1997
- (Mester, 1997) ⇒ Loretta Mester. (1997). “What’s the Point of Credit Scoring.” In: Federal Reserve Bank of Philadelphia Business Review 3-16.
- QUOTE: … To build a scoring model, or “scorecard,” developers analyze historical data on the performance of previously made loans to determine which borrower characteristics are useful in predicting whether the loan performed well. A well-designed model should give a higher percentage of high scores to borrowers whose loans will perform well and a higher percentage of low scores to borrowers whose loans won’t perform well. But no model is perfect, and some bad accounts will receive higher scores than some good accounts.