A survey of credit and behavioural scoring: forecasting financial risk of lending to consumers

Credit scoring and behavioural scoring are the techniques that help organis ations decide whether or not to grant credit to consumers who apply to them . This article surveys the techniques used - both statistical and operation al research based to support these decisions. It also discusses the need to incorporate economic conditions into the scoring systems and the way the s ystems could change from estimating the probability of a consumer defaultin g to estimating the profit a consumer will bring to the lending organisatio n - two of the major developments being attempted in the area. It points ou t how successful has been this under-researched area of forecasting financi al risk. (C) 2000 Elsevier Science B.V. All rights reserved.