Credit scoring systems can be used to:
A)Reduce the effective cost of trade
B)Determine the cost of goods sold
C)Evaluate Dun & Bradstreet's reports
D)Evaluate credit risk based on the borrower's characteristics

Question

Quizplus · Accepted Answer

Credit scoring systems are mainly used to evaluate credit risk based on the borrower's characteristics, such as their credit history, income, and debt-to-income ratio. This helps lenders determine the likelihood of a borrower defaulting on a loan, and therefore whether to approve or deny the loan application, as well as set an appropriate interest rate. Credit scoring systems do not determine the cost of goods sold or evaluate Dun & Bradstreet's reports, nor do they directly reduce the effective cost of trade.

Credit Scoring Systems Can Be Used To