Credit Scoring System

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One of the important functions realized by a credit scoring system is information processing. Every information processing system includes:

• input information

• module of processing information

• output information

In the case of credit scoring system input, information consists of:

• registry information

• financial information (financial statements)

• benchmarking information

• inner information of the bank on creditability of the customer

The outcome of the processing information is a symbol of credit risk class relevant to the level of risk of the transaction.

The information on the risk level can be helpful in such decision problems as:

• granting or denying a credit

• defining terms of credit

• scope and frequency of monitoring a customer's financial position

As the scope of input information is defined, the credibility of the outcome results, and costs of the processing (e.g., time, involved resources) are closely related to the processing technique.

In this chapter, we present two techniques of information processing in the credit scoring system:

• traditional credit-scoring method ("The Scope of the Economic-Financial Analysis of an Enterprise")

• using Bayesian belief network ("Credit Scoring System—The Bayesian Network Implementation")

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