Credit scoring procedure

A risk assessment method used primarily for personal loans, but also for small-scale enterprises (petty traders). In this process, certain characteristics – such as address, age, gender, nationality, marital status, number of children, level of education, religious affiliation, professional qualifications, employer, income, assets, length of tenancy, state of health, number of contracts, accounts and credit cards, payment behavior and the customer’s willingness to provide information – are assigned points (scores: evalutative records). The total number of points awarded in this way results in a risk class. In the case of loan applications, the cost-based pricing, i.e. the interest rate to be paid, is adjusted to the credit default risk determined by the procedure. – The results are also used to target specific customer groups in the retail business through marketing measures. – See payoff period, Bank Lending Survey, bank customer profile, book loan, covenant, customasing, fact sheet, credit factory, credit crunch, lending principle, customer dossier, minimum down payment, personal loan, product placement, retail business, risk weighting, risk management, scoring, overconfidence, debt ratio, private, payment morale, interest rate statistics.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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