Credit score and its applications

Author: (USA) Thomas Wang Xiaolei
Publisher:
Publish Date: 2006-01-01
Features: The rapid growth of the credit market has led to the publication of "Credit Scoring and Its Applications." This is the only work that provides a detailed description of the mathematical models used in credit scoring, enabling credit institutions to make reliable credit risk decisions. Lenders are required to make various risk decisions every day. This book focuses on introducing two fundamental types of decisions and provides effective mathematical models to assist in decision-making. The first type of decision faced by lenders is whether to approve a new customer's loan application, and the second type is how to manage existing customers' credit or market new products. The book offers a comprehensive introduction to the objectives, methods, and operational aspects of credit scoring and behavioral scoring. The author analyzes and compares the statistical principles and operational research methods used in building scoring cards, as well as the advantages and disadvantages of different approaches. It also describes the operational challenges encountered in the process of building, using, and monitoring scoring cards, while examining the legal differences across countries regarding bankruptcy, fair credit, and personal privacy protection. The book also introduces the economic theoretical foundation for consumers' use of credit tools. Readers will understand the goals and evolving objectives of credit institutions when using credit scoring technology. Although credit scoring technology is widely used in credit operations, no other book has yet provided a detailed description of the various statistical and operational research methods used in credit scoring, including discriminant analysis, logistic regression, linear programming, neural networks, genetic algorithms, and more. Other features of the book include discussions on scoring card monitoring methods and when to update scoring cards, as well as the applications of credit scoring in other areas, such as direct marketing, profit scoring, tax inspections, prisoner release, and fine payments.