Credit scoring is a statistical method used by lenders to evaluate the creditworthiness of a borrower, predicting the likelihood of default based on historical data and various financial indicators. It plays a crucial role in determining loan eligibility, interest rates, and credit limits, impacting both consumer access to credit and lender risk management.

Credit Scoring

Credit scoring

Statistical methods are a collection of mathematical techniques used to analyze and interpret data, helping to make informed decisions based on empirical evidence. They encompass a range of procedures, including data collection, analysis, interpretation, and presentation, enabling researchers to draw valid conclusions and predictions from data samples.

statistical method

Evaluate creditworthiness

likelihood of default

Historical data refers to past records and information that are used to analyze trends, make predictions, and inform decision-making processes. It is crucial for understanding patterns over time and provides a foundation for statistical analysis and forecasting in various fields.

historical data

financial indicators

loan eligibility

Interest rates represent the cost of borrowing money or the return on savings, influencing economic activity by affecting consumer and business spending. Central banks adjust interest rates to control inflation and stabilize the economy, making them a critical tool in monetary policy.

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