Credit Scoring for Risk Managers: The Handbook for Lenders

Credit Scoring for Risk Managers: The Handbook for Lenders Elizabeth Mays and Niall Lynas (2010)

"You know you're a golf fanatic when you save all your scorecards-well, at least the good ones."

In that context, Elizabeth Mays and Niall Lynas, in their updated handbook Credit Scoring for Risk Managers, demonstrate practical ways to construct good consumer scorecards. Not only does this book contain sound statistical approaches, but even more importantly, it delivers practical advice, presented in multiple formats, for assessing risk in consumer portfolios.

To begin with, the authors do not hesitate to evaluate the performance of scorecards during the recent economic crisis, and they conclude that scores continued to rank-order potential defaulters well-at least outside the mortgage product. The culprits, they assert, were management of the scorecards and policies for their use. Lessons can be learned from the perils of simultaneously introducing new products and targeting new customers, along with relying excessively on generic bureau scores rather than custom scores.

The statistical material is presented...