Paper
Credit Scoring for Microenterprise Lenders
What role might credit scoring play in the U.S. microlending field?
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48 pages
This paper discusses credit scoring as a tool for lenders to improve performance and efficiency of their loan programs. It lists out some of the benefits of using credit scoring. These include:
- Delinquency reduction;
- Increased consistency in decision-making;
- Greater clarity in decision process;
- Improved efficiency in lending process;
- Implementation of risk based pricing.
The paper further discusses:
- Correlation between credit bureau scores and repayment;
- ACCION USA's approach to and experience with credit scoring;
- Present benefits and future applications of credit scoring;
- Critical issues in implementing credit scoring.
The paper concludes that credit scoring holds a promise for microlenders seeking to make significant advances in the scale of lending operations.
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