Scoring Models of Bank Credit Policy Management

Hanić, Aida and Žunić, Emina and Dželihodžić, Adnan (2013) Scoring Models of Bank Credit Policy Management. Economic analysis, 46 (1-2). pp. 12-27. ISSN 1821-2573

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Abstract

The aim of this paper is to present how credit scoring models can be used in financial institutions, in this case in banks, in order to simplify credit lending. Unlike traditional models of credit analysis, scoring models provides valuation based on numerical score who represent clients’ possibility to fulfil their obligation. Using credit scoring models, bank can create a numerical snapshot of consumers risk profile. One of the most important characteristic of scoring models is objectivity where two clients with the same characteristics will have the same credit rating. This paper presents some of credit scoring models and the way that financial institutions use them.

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