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Essay / Research Paper Abstract
This 12 page paper provides an overview of the use of consumer credit scoring and its application. For decades, credit companies have determined what products they will provide for their customers and who qualifies for their products based on a consumer credit scoring system, which essentially based on a behavior scoring that incorporates a view of both spending and payments. This paper outlines this premise. Bibliography lists 13 sources.
Page Count:
12 pages (~225 words per page)
File: MH11_MHConsuC.rtf
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Unformatted sample text from the term paper:
based on a behavior scoring that incorporates a view of both spending and payments. Credit limits, then, are generally based on views of consumer behavior and cumulative assessments of
products being utilized and generalized views of individuals behaviors. From a consumer perspective, the application of behavior scoring can have many different implications. For example, when an
individual applies for a credit product, comparisons are made not only between behaviors and company expectations, but also between behaviors and existing product usage. A consumers related products and
their usage can influence the way in which further product risk is assessed and can also determine whether credit lines are expanded, maintained or reduced. Because of the
broad range of risk elements and the factors utilized to predict product risk using consumer behavior scoring, there are some questions about the ethics of the use of this type
of process, including the ethics of the upsell of credit limits based on consumer behavior scores. Further, the impact of this process over time should also be considered as
an element of assessing the use of consumer behavior scores. The current literature, then, reflects a variety of views and outlines the underlying principles, models and views that influence
consumer behavior scoring and its application. Literature Review Consumer behavior scoring is a scoring system that is applied to ongoing loan repayment or credit card repayment and integrates
a view of purchasing behavior and repayment history to predict the chances of an existing account either becoming or remaining in default (EnviroTech Financial, 2002). In general, banks and
credit companies utilize consumer behavior scoring on a monthly or quarterly basis, and utilize consumer behavior scoring to determine loan renewals, increases in credit lines, and collection processes (EnviroTech Financial,
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