A combined conceptual, theoretical and empirical review of credit-scoring models

Abstract

This chapter reviews credit-scoring models as quantitative tools used by lenders to evaluate credit risk. It provides a wide-ranging review of existing and novel parametric and nonparametric techniques used in credit score modeling. It also contains a comprehensive survey of empirical work in the literature on credit-scoring models from 1992 to 2006. The main purpose of the chapter is to facilitate the selection of the variables and techniques used in constructing credit-scoring models by industry practitioners and academic researchers.