What is the name of the procedure that applies statistically derived weights for key financial and credit characteristics to predict whether or not a credit applicant with specific scores for each characteristic will pay the requested credit in a timely fashion?

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Quizplus · Accepted Answer

The procedure described in the question is credit scoring. Credit scoring uses statistical models to determine the likelihood that a borrower will default on a loan based on their financial and credit history characteristics. The scores are derived by assigning weights to each characteristic and then summing them to arrive at an overall score. This score is used to assess the risk of lending to the borrower and determine whether to approve the credit request. Options A, B, D, and E are not applicable to the procedure described in the question.

What Is the Name of the Procedure That Applies Statistically