The rapid growth of credit card business in the local market plus the increasing cost in recruiting and training credit officer has urged the need of credit scoring system. By application of the law of statistical probability, credit scoring system can improve efficiency and at the same time eliminate the inconsistency in application of credit policies by credit officers.
Credit scoring system can be developed through some basic steps:
1. Selection of population
2. Definition of satisfactory and unsatisfactory performance
3. Acquisition of sample data
4. Conversion of data to machine unsable form
5. Initial data review
6. Attribute grouping and score weight calculation
Credit scoring is a management tool which must be understood and well managed. The performance of the system must be tracked and monitored throughout the life time to detect changes and to apply corrective actions, if necessary, to become benefitial to the user. |