How to build a credit-scoring model with big data
Companies continually test, build and update their credit-scoring models. Here’s a peek at that process and how technological advances could change it.
You may occasionally see headlines when credit-scoring companies like FICO or VantageScore release a new credit-scoring model. There might be a discussion in the media about how those new models could affect consumers’ credit scores and ability to get approved for loans and credit cards. That’s only part of the picture, though.
Unknown to many consumers, large financial services companies are continually creating and updating custom scoring models. They may use these models instead of, or in combination with, scores created by credit-score-industry heavyweights FICO or VantageScore.
Today, companies are able to gather and analyze vast amounts of data, which they can use to help determine your score using custom scoring models.