We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Credit scoring model - Coursework Example

Comments (0) Cite this document
Summary
Credit scoring model Name: Institution: Date: Executive summary As times change, use of credit scoring model has become a centrally important issue. This is mainly attributed to the increased number of competitors as well as the many cases of bad debt that have often arisen from transactions…
Download full paperFile format: .doc, available for editing
Polish This Essay97.8% of users find it useful
Credit scoring model
Read TextPreview

Extract of sample
"Credit scoring model"

Download file to see previous pages As a way of solving classification issues and also decreases Type I errors, typical of many credit scoring models, this piece attempts to describe or rather come up with an appropriate credit scoring model via two stages. Classification stage involves development and construction of an ANN-based credit scoring model, which basically classifies applicants into two categories, which are, those who have acceptable credit (good) and those who have unacceptable credit (bad). In the second stage, which will also be referred to as the re-assigning stage, attempt is made to lower Type I error through reassignment of the unaccepted applicants with good credit to a conditionally accepted category making use of a CBR-based classification approach. In a bid to demonstrate the effectiveness of the model proposed in this paper, an analysis is run on a German dataset with assistance of SAS Enterprise Miner. The results will be expected to not only prove that the model is a more effective credit scoring model but that it will also enhance the business revenues through its ability to lower both Type I and Type II error system scoring errors. Introduction Data mining is a process that involves search and analysis of data so as to find implicit, although substantially vital information. It covers selection, exploration and modeling of large data volumes with the aim of uncovering previously unrecognized patterns, and in the end generate understandable information, from huge databases. It generally employs an extensive range of computational techniques which include approaches such as statistical analysis, decision trees analysis, neural networks review, rule induction and refinement approach, as well as graphic visualization. Of the various mentioned methods, the classification aspect has an important role in decision making within businesses mainly as a result of the extensive applications when it comes to financial forecasting, detection of fraud, development of a marketing strategy, credit scoring, to mention just but a few. The aim of developing credit scoring models is to assist financial institutions to detect good credit applicants who are more likely to honor their debt obligation. Often such systems are based on multiple variables including the applicant’s age, their credit limit, income levels, as well as marital status, among others. Conventionally, there are many distinct credit scoring models which have been developed by financial as well as researchers in a bid to unravel the mysteries behind classification problem. Such include linear discriminant analysis, logistic regression, multivariate adaptive regression splines, classification, as well as regression tree, case based reasoning, and of course the artificial neural networks. Normally, linear discriminant analysis, logistic regression, and artificial neural networks are utilized in construction of credit scoring models. LDA is amongst the earliest forms of credit scoring model and enjoy widespread usage across the globe. Nonetheless, its use has often been subjected to criticism based on its assumption of existence of a linear relationship between the input variables and the output variables. Sadly, this is an assumption that seldom holds, and is rather sensitive to deviations arising from assumption of multivariate normality (West, 2000). Like LDA, LR is also a rather common alternative employed in performance of credit scoring assessments. In essence, the LR model has stood out as the best ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Credit scoring model Coursework Example | Topics and Well Written Essays - 5000 words”, n.d.)
Retrieved from https://studentshare.org/statistics/1400730-data-mining
(Credit Scoring Model Coursework Example | Topics and Well Written Essays - 5000 Words)
https://studentshare.org/statistics/1400730-data-mining.
“Credit Scoring Model Coursework Example | Topics and Well Written Essays - 5000 Words”, n.d. https://studentshare.org/statistics/1400730-data-mining.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
A Credit Default Swap (CDS)
A Credit Default Swap (CDS) is a monetary swap agreement between parties designed to shift the credit exposure of unchanging income products (Choudhry, 2006). The agreement facilitates the lender or creditor to transfer credit from a third party to an insurer who agrees to insure the risk of default payment of credit.
9 Pages(2250 words)Coursework
E-Commerce business model
This report presents an analysis of an e-commerce business. In this report I have chosen an online business known as GAP enterprise. This firm uses its web based platform to sell high quality dresses and fashion accessories to a wide variety of customers.
11 Pages(2750 words)Coursework
Graham Gibb's Reflective Model
“Reflection”, pertains to the action of paying particular attention to practical theories and values that inform Humanity on their day to day lives, that includes their actions and thinking patterns. It involves learning from one’s experiences, whether good or bad, rather than from either knowledge transfer or formal teaching.
3 Pages(750 words)Coursework
General Linear Model
Though the main two purposes for this paper were statistical analysis it is important to understand the research question and all the factors surrounding it. It is not sufficient to just 'plug variables into a program' and apply the results without an understanding and background research on the topic.
32 Pages(8000 words)Coursework
Credit Scoring and Its Impact
It includes statistical information about a borrower, the purpose of which is to determine the likelihood of whether the person will pay on time.2 Along with a person's credit history, a credit score has an impact on whether or not a borrower's credit applications will be approved, such as a mortgage, car loan, and credit card, including the interest rates he should pay.3 The credit score is a key information in order that a person will have a complete understanding of his/her credit profile.
18 Pages(4500 words)Essay
Macroeconomics (credit card impact)
The first category of money consists of currency, demand deposits, and other liquid deposits against which credit can be taken (Zandi and Singh, 2010). The second category consists of M1, time deposits, and other deposits in banks, while the third
1 Pages(250 words)Coursework
The Bruce Tuckman Model
the fact that they are working through the point in group and team development where normalization of performance of team members has to be done in order to smooth organizational performance. The topnotch player is unreliable but that condition is rather appearing superficial to
2 Pages(500 words)Coursework
Complaint-Push Model and Data-Pull Model
In this model, patients with complaints call for appointments or access the service location directly where the health care providers assess the complaint and recommend further tests before diagnosing.
3 Pages(750 words)Coursework
Health belief model
The author examines the Health Belief Model through its procedural concepts. He provides a stage-by-stage guideline to nurses in encouraging the patients to change their behaviors for the betterment of their health. In creating awareness and educating the community, nurses play their relevant role in diseases prevention and treatment.
1 Pages(250 words)Coursework
Congruence model assignment
The relationship between the tasks and people at Stone Finch Company is that of confusion and mismanagement. Jim Billing is making decisions that are detrimental to the cause of the company
2 Pages(500 words)Coursework
Let us find you another Coursework on topic Credit scoring model for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us