Credit scoring models are advantageous because of their ability to sort borrowers into different default risk classes.

Question

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Credit scoring models use a variety of factors to predict the likelihood of a borrower defaulting on a loan. By sorting borrowers into different default risk classes, lenders can make more informed decisions about lending money and setting interest rates. This can ultimately lead to more responsible lending practices and lower default rates.

Credit Scoring Models Are Advantageous Because of Their Ability to Sort