Credit Risk Scorecards: Developing and Implementing Intelligent Credit Scoring
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Praise for Credit Risk Scorecards

"Scorecard development is important to retail financial services in terms of credit risk management, Basel II compliance, and marketing of credit products. Credit Risk Scorecards provides insight into professional practices in different stages of credit scorecard development, such as model building, validation, and implementation. The book should be compulsory reading for modern credit risk managers."
—Michael C. S. Wong Associate Professor of Finance, City University of Hong Kong Hong Kong Regional Director, Global Association of Risk Professionals

"Siddiqi offers a practical, step-by-step guide for developing and implementing successful credit scorecards. He relays the key steps in an ordered and simple-to-follow fashion. A 'must read' for anyone managing the development of a scorecard."
—Jonathan G. Baum Chief Risk Officer, GE Consumer Finance, Europe

"A comprehensive guide, not only for scorecard specialists but for all consumer credit professionals. The book provides the A-to-Z of scorecard development, implementation, and monitoring processes. This is an important read for all consumer-lending practitioners."
—Satinder Ahluwalia Vice President and Head-Retail Credit, Mashreqbank, UAE

"This practical text provides a strong foundation in the technical issues involved in building credit scoring models. This book will become required reading for all those working in this area."
—J. Michael Hardin, PhD Professor of StatisticsDepartment of Information Systems, Statistics, and Management ScienceDirector, Institute of Business Intelligence

"Mr. Siddiqi has captured the true essence of the credit risk practitioner's primary tool, the predictive scorecard. He has combined both art and science in demonstrating the critical advantages that scorecards achieve when employed in marketing, acquisition, account management, and recoveries. This text should be part of every risk manager's library."
—Stephen D. Morris Director, Credit Risk, ING Bank of Canada


NAEEM SIDDIQI is a Business Solution Specialist-Risk with SAS® Canada. He has over twelve years' experience in credit risk management, both as a consultant and as a user at financial institutions. He played a key role in the development of SAS Credit Scoring, and provides worldwide support for this initiative. Siddiqi has conducted training sessions on this methodology in Belgium, Germany, Hong Kong, Thailand, Malaysia, Taiwan, and Australia, as well as the United States, and is a frequent speaker on credit scoring related topics at conferences worldwide. Siddiqi has an honours bachelor of engineering from Imperial College of Science, Technology and Medicine at the University of London, and an MBA from York University in Toronto.



Chapter 1: Introduction.

Scorecards: General Overview.

Chapter 2: Scorecard Development: The People and the Process.

Scorecard Development Roles.

Intelligent Scorecard Development.

Scorecard Development and Implementation Process: Overview.

Chapter 3: Scorecard Development Process, Stage 1: Preliminaries and Planning.

Create Business Plan.

Create Project Plan.

Why “Scorecard” Format?

Chapter 4: Scorecard Development Process, Stage 2: Data Review and Project Parameters.

Data Availability and Quality.

Data Gathering for Definition of Project Parameters.

Definition of Project Parameters.



Review of Implementation Plan.

Chapter 5: Scorecard Development Process, Stage 3: Development Database Creation.

Development Sample Specification.

Development Data Collection and Construction.

Adjusting for Prior Probabilities.

Chapter 6: Scorecard Development Process, Stage 4: Scorecard Development.

Explore Data.

Missing Values and Outliers.


Initial Characteristic Analysis.

Preliminary Scorecard.

Reject Inference.

Final Scorecard Production.

Choosing a Scorecard.


Chapter 7: Scorecard Development Process, Stage 5: Scorecard Management Reports.

Gains Table.

Characteristic Reports.

Chapter 8: Scorecard Development Process, Stage 6: Scorecard Implementation.

Preimplementation Validation.

Strategy Development.

Chapter 9: Scorecard Development Process, Stage 7: Postimplementation.

Scorecard and Portfolio Monitoring Reports.





"The book is a comprehensive guide for developing, implementing and monitoring credit risk scorecards." (Institute of Chartered Financial Analysts of India, November 2006)