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Score Validations

Executive Brief

Score Validations

Prove Scoring Works for Your Small Business Portfolio

Executive Brief

When you start using scoring in small business credit origination, you need to know which score cutoffs to use to automate decisions. Performing a model validation proves exactly where cutoffs should be set on your account population to approve or decline applicants. This process is a basic best practice. It proves that the small business scorecard, a model developed from pooled or other data, is working properly on your own production data from new credit applications or when you move to a different score and score version. Do booked applicants who received high scores actually have low levels of serious delinquency? And vice versa? Does the performance of applicants with mid-range scores show moderate risk? Validation answers these questions and demonstrates that scoring is helping you make objective, fair, consistent credit decisions.