STATISTICAL CLASSIFICATION METHODS IN CONSUMER-CREDIT SCORING - A REVIEW

Credit scoring is the term used to describe formal statistical methods used for classifying applicants for credit into 'good' and 'bad' risk classes. Such methods have become increasingly important with the dra matic growth in consumer credit in recent years. A wide range of stati stical methods has been applied, though the literature available to th e public is limited for reasons of commercial confidentiality. Particu lar problems arising in the credit scoring context are examined and th e statistical methods which have been applied are reviewed.