New handbook revolutionizes credit scoring for lenders, impacting loan approval rates.
The article discusses how credit scores are used in lending, comparing different scoring models and the importance of credit bureau data. It also covers developing and validating scorecards, analyzing variables, and forecasting losses. The impact of excluding certain data on credit score models is explored, along with fair lending concerns. Implementing, monitoring, and managing credit scores are detailed, including how to use scorecards effectively and pricing based on risk.