Scorecard Basics

What is a scorecard?

A scorecard is a powerful statistical model that can help with mission critical decision making. The modern scorecard has virtually transformed the credit-granting and collections industry over the past decade. 

Scorecards are used to help make approval/decline decisions on new applications for granting credit (they tell you who's likely to default before you authorize credit); they're used extensively to help guide collection efforts (they tell you which delinquent accounts are likely to self-cure, or get worse); they're used in marketing to decide who to send mailers to (they tell you which consumers are most likely to respond); and they're used in many, many, other ways across a multitude of industries.

Human behavior repeats itself over time (good behavior and bad behavior). If you're looking to gauge the likelihood that a potential or existing customer of yours is going to exhibit some type of behavior, then scorecards are the way to go! We'll discover the patterns that exist in your historical data and use that information to build a statistical model you can use to score future accounts.

Want to know the statistical odds before taking action? A scorecard model is the answer! Let us teach you this art and help you stay ahead of the curve in your industry. 

Why can't I just use FICO?

Everyone's familiar with the FICO score, right? The higher the FICO, the lower the risk of default. The FICO "model" is a scorecard model, exactly like the ones we'll teach you to build. The trouble is, the FICO model wasn't built on "your" data. It was built on customers across a host of industries covering most of the credit spectrum. The result is a significant loss of predictive power.

Consider trying to predict the behavior of a cheetah. So you go to the zoo and monitor every animal with four legs and a tail. What you'll end up with is a generalized consensus that is roughly true of cheetahs, but is also true of elephants, giraffes, and bears. If you want to build a model that predicts how cheetahs behave, you need to study just cheetahs! FICO is not the answer and is costing you money!

It's always fun to compare your model's "predictive power" to that of the FICO score. We'll show you how to perform these comparisons and you'll be blown away at how much stronger your models are than FICO—and that power boost will significantly improve your bottom line!