Credit Scoring


Many companies use credit scores as an indicator of risk potential for conducting business with customers. There are various types of credit scores available, all of which are generated with quantitative techniques to measure and evaluate the creditworthiness of an applicant.

Credit scores are usually a numerical expression based on the statistical analysis of an applicant’s credit records. This number represents the creditworthiness of the individual and the likelihood that they will repay debts on time. Among other things, credit scores are used to evaluate loan qualification, set interest rates, and determine credit limits. Various factors are included in the calculation of a credit score including: liquidity, management ability, history of bill payment, number and amount of outstanding loans, number of credit cards, credit card balances, etc.

Many companies purchase commercially available credit scores to assist in making decisions related to doing business with individuals or other businesses. Some companies prefer to develop their own credit score using internal customer data collected over time. With this approach, very accurate, customized credit scores can be constructed that are highly specific to the company.

The development of credit scores is closely linked with data mining because of the need to identify the key data elements that drive creditworthiness. Inteletix will mine your data to identify key drivers of creditworthiness and build an algorithm (mathematical formula) that will enable you to attach a credit score to all of your customer accounts. Additional mining of the company’s customer data will furnish information and knowledge to facilitate the establishment of credit limits.

learn more