Credit scoring models play a fundamental role in the risk management practice at most banks. They are used to quantify credit risk at counterparty or transaction level in the different phases of the credit cycle (e.g. application, behavioural, collection models). The credit score empowers users to make quick decisions or even to automate decisions and this is extremely desirable when banks are dealing with large volumes of clients and relatively small margin of profits at individual transaction level (i.e. consumer lending, but increasingly also small business lending).
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