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Chapter 10: Credit Scoring

Perhaps a better name for this chapter is: How do they really figure out so quickly if I’m approved? Well, this is where lenders do their own scoring on each customer to make important credit decisions very accurately, quickly and in large quantities.

From banks to finance companies, every lender relies on one system or another. It takes almost all discretion out of deciding on an approval or turndown if it does not meet their minimum requirements. But nobody is declined based on score alone, but always on the underlying factors that created the (low) score…

…most people become uneasy at the initial thought of their credit application being handled by a machine and not a person. Quite the opposite is true. Long gone are the days of credit personnel relying on intuition and experience. Any credit officer that had recent collection problems with a roofer, for example, is unlikely to approve anyone else in that same occupation for a long time, no matter what the next one’s credit rating. Previous manual systems also tended to stereotype against divorcees (of both sexes), certain occupations or lifestyles and often against women. None of that ever enters into scoring systems.