A two-stage dynamic credit scoring model, based on customers’ profile and time horizon.

As credit card usage has expanded rapidly worldwide, credit scoring has become a very important task for banks, which can benefit from reducing possible risks of default. Credit scoring models help decision makers to decide whether to issue a credit card to a new applicant on the basis of both financial and nonfinancial criteria. The scope of the current study is to develop a dynamic scoring model that (a) estimates the credit performance of an applicant using generalised linear models and (b) accommodates the changes of a borrower's characteristics after the issuance of the credit card and forecasts the time of default using survival analysis.Journal of Financial Services Marketing (2008) 13, 17–27. doi:10.1057/fsm.2008.2 [ABSTRACT FROM AUTHOR]