Why scorecard is not scoring. What is the difference? Why is it important not to forget about scoring in an attempt to introduce automated models of customers assessment?
Scorcard is just a model. Scoring is a multifunctional platform.
Generally speaking, "scorcard" can simply be replaced with "model". The meaning will not change. We often hear the phrase "I have scoring", but after 30 seconds it becomes clear that there is not scoring, but a model of customer assessment. In essence, a model is a scale of rating of the client in the selected numerical range. The model is needed in order to compare, compare clients. In general - everything. If your underwriter/backer looks at the rating of the client and makes a decision, disappointment - you have no scoring. You just have a rating model. Scoring is a much broader concept than just a model. Within the scoring system there is a process, and the process is multi-level, the task of which is to manage the costs of customer assessment, approval/failure levels, the load on underwriters, scoring models (not always scorecards, increasingly models with boosting or ml-components), the company’s portfolio strategy as a whole, the strategy of communication with the client in different cases of interaction with him. Scoring system - about the process of assessment of the borrower, about change management and risk management. With the help of the scoring system you can react more quickly to threats, changes in capital and liquidity, to changes in external conditions.
When implementing our BlackFlow scoring system, you can not only solve these problems without programming skills, but also get access to built-in working models of assessing solvency.
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