The purpose of credit-scoring model and the manner in which these model help an FI manager to better administer credit. The credit scoring system is a numerical system that ascertains the repayment ability of the borrower and lenders use this to evaluate a borrower before lending money to them. The system is based on the specific scores which are assigned based on certain factors that influence the creditworthiness of the borrower. The credit-scoring system measures the creditworthiness of borrowers.

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Chapter 20, Problem 3Q

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To determine: The purpose of credit-scoring model and the manner in which these model help an FI manager to better administer credit.

The credit scoring system is a numerical system that ascertains the repayment ability of the borrower and lenders use this to evaluate a borrower before lending money to them. The system is based on the specific scores which are assigned based on certain factors that influence the creditworthiness of the borrower. The credit-scoring system measures the creditworthiness of borrowers.

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