Credit Scores
Credit scores can be computed in many different ways, and thus, there
many different scores. However, all of these scores are based on
statistics and data analysis of credit reports. Their reliability in
measuring actual creditworthiness is tested by studies that measure the
actual future behavior of people, from a sample that is representative
of the general population, with their credit score. The goal of any
credit score model is to be able to identify as many people as possible
that are actually good credit risks, while also identifying the bad
risks. If the credit scoring model is too stringent, it may eliminate
many people who are actually good credit risks, thus, decreasing profits
to lenders because they are eliminating these potential customers who
failed to pass the minimum score set by the lender.On the other hand, if the scoring model is too relaxed, it may give
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