Scoring's accuracy gives lenders a reliable method of avoiding poor performing loans. Make more credit available. Lenders using credit scoring can expand the numbers of applications they can accept, without taking on a larger pool of poor performing loans. Improve operating efficiency. Credit scoring and automation speed up the entire decision process.
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Credit bureau scores are calculated by computer software containing a scoring model. Each model is built by analyzing the information contained in large samples of anonymous borrowers' credit files. Analysts tracked how those borrowers paid their bills and identified patterns in the credit bureau data that correlated to payment history. Other models can be developed from different sources of data. A custom model is developed from a business's own data - information on its customers from credit application forms and credit bureau reports.