Open Access
Journal Article
Predictive Analytics for Credit Scoring
by
Sophia Smith
Abstract
The rapid development of technology has revolutionized the financial industry, leading to an increased reliance on predictive analytics in credit scoring models. This paper explores the application of predictive analytics in credit scoring, highlighting its significance in enhancing risk assessment and decision-making processes. The study delves into the various techniques util
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The rapid development of technology has revolutionized the financial industry, leading to an increased reliance on predictive analytics in credit scoring models. This paper explores the application of predictive analytics in credit scoring, highlighting its significance in enhancing risk assessment and decision-making processes. The study delves into the various techniques utilized in predictive analytics, such as regression analysis, machine learning algorithms, and data mining. By analyzing historical data and identifying patterns, predictive analytics enables lenders to make more accurate and informed decisions regarding creditworthiness. The paper further discusses the challenges and limitations associated with predictive analytics in credit scoring, emphasizing the importance of data quality, privacy concerns, and ethical considerations. Additionally, it examines the potential impact of predictive analytics on the financial sector and its role in promoting financial inclusion. The study concludes that predictive analytics has the potential to transform the credit scoring landscape, offering a more efficient and reliable system for lenders and borrowers alike.