In This Chapter

Credit Scoring Models

Authored by: Thierry Roncalli

Handbook of Financial Risk Management

Print publication date:  April  2020
Online publication date:  April  2020

Print ISBN: 9781138501874
eBook ISBN: 9781315144597
Adobe ISBN:


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Credit scoring refers to statistical models to measure the creditworthiness of a person or a company. They have progressively replaced judgemental systems and are now widely used by financial and banking institutions that check the credit rating and capacity of the borrower before to approve a loan. Therefore, credit scoring is at the heart of the decision-making system for granting credit. This is particularly true for consumer credit (mortgage, credit card, personal loan, etc.). Credit scoring models are also used for commercial firms, but their final outputs are generally not sufficient for making a decision. For instance, they can be completed with the knowledge of the relationship manager on the company.

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