Scoring Tutorials

Clear and practical explanations about scoring and scorecard development

Acquaintance with Scoring


Scorecard Validation


Scorecard Development Stages


Scorecard Implementation & Deployment

 

Advanced How-to

Credit scoring is one of the most successful applications of statistical techniques in finance and banking. Without an accurate and automated credit risk assessment tool, the phenomenal growth of consumer credit would not have been possible.

In the past financial organizations could order scorecards from a handful of credit risk consultants. In the last few years however a new trend toward developing custom scorecards in-house has become more widespread. Experience has shown that in-house scorecard development can be done faster, cheaper and with more flexibility. In addition the superior knowledge of internal data and business realities result in better-performing scorecards with biases which more appropriately reflect the risk appetite of the organization in question. Experiments with segmentation can not only help in building more accurate scorecards, but also in finding the ideal number and structure of scorecards. The scoring model development process can reveal some hidden gems of information that will help to better understand customers’ behavior as it applies to risk, which can consequently result in better credit strategy development.

Below we provide an overview of various professional practices in different stages of credit scorecard development, such as data preparation, scoring model building, scorecard validation and implementation.

Your scorecard development project may need to be handled in a different way depending on your organization’s specific situation. So, this methodology should therefore be treated as a set of guidelines rather than a set of strict rules that must be followed.


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