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Time varying or static cut-offs for credit scorecards

Author

Listed:
  • K M Jung

    (Kyungsung University, Busan, South Korea)

  • L C Thomas

    (University of Southampton, Southampton, UK)

  • M M-C So

    (University of Southampton, Southampton, UK)

Abstract

This note points out that the ability of credit scorecards to separate Goods from Bads changes over time. A simple way of dealing with such changes is to adjust the cut-off scores being used. These adjustments can be made by using the score to log odds relationship which is regularly monitored. In a case study there are decreases in the costs—in some case considerable decreases—of using the scorecard by making such adjustments compared with making no adjustments.

Suggested Citation

  • K M Jung & L C Thomas & M M-C So, 2013. "Time varying or static cut-offs for credit scorecards," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 64(9), pages 1299-1306, September.
    • Handle: RePEc:pal:jorsoc:v:64:y:2013:i:9:p:1299-1306
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