- Webinar: Developing an Internal Credit Scoring System: Best Practices
- NACM Webinar
Developing an Internal Credit Scoring System: Best Practices
Time: 2:30 - 3:30 pm EST
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Developing internal scoring systems, is a popular pursuit for credit executives. Using their intimate understanding of the business credit practices, the hope is that an internally developed 'expert-based' credit score, will result in a stronger, more applicable risk tool. The goals are to improve decision making and operational efficiency within the credit organization and also to reduce the natural tension between credit policy and sales objectives.
Internal Credit Scoring Systems are usually developed by a team from the credit and collection organization. These systems are typically a rules based systems, assigning points based upon common risk metrics (e.g., firm's age, firm's size, industry, and previous payment experiences, etc.).
This seminar will include a 'how do' guide for developing an effective credit scoring system for your organization. Examples of credit scoring applications will be demonstrated.
Key Questions to be addressed
• What is an internal credit scoring system?
• What is the process to develop a scorecard?
• How do you choose the appropriate risk metrics (data element)?
• How do we know if it actually 'works'? And what does 'working' exactly mean?
Topics to be included
• Types of scorecards (statistical, rules-based, hybrids)
• Benefits of credit scoring
• Pitfalls to avoid
• Choosing the best data elements
• Weighting your scorecard variables
• Using generic credit scores
• Credit Analyst 'manual' decision versus Credit Score 'automated' decision
• Pre versus Post Scoring rules
• Managing Credit Risk versus Business Risk Policy
• Validation of scorecard's predictive power
• Implementation and dealing with technology issues
Vernon Gerety, PhD, has over 25+ years of experience in the development and application of credit scoring systems. Previous professional experience includes D&B, Citicorp, GE Capital, and Advanta. In addition, Vernon has spent the last 10+ years as a credit scoring consulting for clients including Arrow Electronics, Bank of America, DLL, and Canon Financial Services.
Vernon also was the developer of the NACM CIC Score as part of the National Trade Credit Report that has grown to over 8+ million trade lines.
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