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A profit-based scoring system in consumer credit: making ac credit quisition decisions forcards / R. T. Stewart in Journal of the operational research society (JORS), Vol. 62 N° 9 (Septembre 2011) 

Public ISBD [article]  in Journal of the operational research society (JORS) > Vol. 62 N° 9 (Septembre 2011) . - pp. 1719–1725 Titre : A profit-based scoring system in consumer credit: making ac credit quisition decisions forcards Type de document : texte imprimé Auteurs : R. T. Stewart, Auteur Année de publication : 2011 Article en page(s) : pp. 1719–1725 Note générale : Recherche opérationnelle Langues : Anglais (eng) Mots-clés : Finance  Banking  Consumer  credit  Credit  scoring  Risk  Multi-objective Index. décimale : 001.424 Résumé : Consumer credit scoring is one of the most successful applications of quantitative analysis in business with nearly every major lender using charge-off models to make decisions. Yet banks do not extend credit to control charge-off, but to secure profit. So, while charge-off models work well in rank-ordering the loan default costs associated with lending and are ubiquitous throughout the industry, the equivalent models on the revenue side are not being used despite the need. This paper outlines a profit-based scoring system for credit cards to be used for acquisition decisions by addressing three issues. First, the paper explains why credit card profit models—as opposed to cost or charge-off models—have been difficult to build and implement. Second, a methodology for modelling revenue on credit cards at application is proposed. Finally, acquisition strategies are explored that use both a spend model and a charge-off model to balance tradeoffs between charge-off, revenue, and volume. DEWEY : 001.424 ISSN : 0160-5682 En ligne : http://www.palgrave-journals.com/jors/journal/v62/n9/abs/jors2010135a.html [article] A profit-based scoring system in consumer credit: making ac credit quisition decisions forcards [texte imprimé] / R. T. Stewart, Auteur . - 2011 . - pp. 1719–1725. Recherche opérationnelle Langues : Anglais (eng) in Journal of the operational research society (JORS) > Vol. 62 N° 9 (Septembre 2011) . - pp. 1719–1725 Mots-clés : Finance  Banking  Consumer  credit  Credit  scoring  Risk  Multi-objective Index. décimale : 001.424 Résumé : Consumer credit scoring is one of the most successful applications of quantitative analysis in business with nearly every major lender using charge-off models to make decisions. Yet banks do not extend credit to control charge-off, but to secure profit. So, while charge-off models work well in rank-ordering the loan default costs associated with lending and are ubiquitous throughout the industry, the equivalent models on the revenue side are not being used despite the need. This paper outlines a profit-based scoring system for credit cards to be used for acquisition decisions by addressing three issues. First, the paper explains why credit card profit models—as opposed to cost or charge-off models—have been difficult to build and implement. Second, a methodology for modelling revenue on credit cards at application is proposed. Finally, acquisition strategies are explored that use both a spend model and a charge-off model to balance tradeoffs between charge-off, revenue, and volume. DEWEY : 001.424 ISSN : 0160-5682 En ligne : http://www.palgrave-journals.com/jors/journal/v62/n9/abs/jors2010135a.html