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Document Type

Thesis - University Access Only

Award Date


Degree Name

Master of Science (MS)

Department / School

Mathematics and Statistics

First Advisor

Thomas Brandenburger


Credit scoring has evolved into a critical tool for assessing risk in consumer lending. This thesis analyzes the standard process of consumer credit scoring including variable selection, coarse classification, model building, and model evaluation. At each stage, popular techniques and the math explaining them are examined. An in depth discussion of the origin of the information value and how the weights‐of‐evidence transformation is related to logistic regression is presented. In addition, a revolutionizing way credit reporting agencies will soon store their data and a new technique to leverage this new data will be introduced. In this technique, velocity variables are created and added to the standard logistic regression model to account for the trend in behavior of credit card consumers. Concluding, a case study comparing the standard consumer credit scoring method to one that leverages the velocity variables available with the new credit bureau data to predict consumer attrition is conducted. Various fit statistics comparing the methods indicated that adding the velocity variables provided significant lift. This new technique is one of many likely to be implemented by modelers to leverage the new data soon available from credit bureaus reporting agencies.

Library of Congress Subject Headings

Credit ratings
Credit scoring systems
Consumer credit
Data mining


Includes bibliographical references (pages 58-59)



Number of Pages



South Dakota State University


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