The impact of credit scoring on consumer lending.
We study the adoption of automated credit scoring at a large auto finance company and the changes it enabled in lending practices. Credit scoring appears to have increased profits by roughly a thousand dollars per loan. We identify two distinct benefits of risk classification: the ability to screen...
| Publicado en: | RAND Journal of Economics (Wiley-Blackwell) Vol. 44; no. 2; pp. 249 - 275 |
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| Autores principales: | , , |
| Formato: | Artículo |
| Publicado: |
Wiley-Blackwell
Summer2013
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | We study the adoption of automated credit scoring at a large auto finance company and the changes it enabled in lending practices. Credit scoring appears to have increased profits by roughly a thousand dollars per loan. We identify two distinct benefits of risk classification: the ability to screen high-risk borrowers and the ability to target more generous loans to lower-risk borrowers. We show that these had effects of similar magnitude. We also document that credit scoring compressed profitability across dealerships, and provide evidence consistent with the view that credit scoring may have substituted for varying qualities of local information. |
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