Which one of the following best defines the term 'credit scoring'?
A)categorising customers into groups depending upon the length of time it takes each customer to pay for purchases
B)process of quantifying the probability of default when granting credit to customers
C)compiling a list of accounts receivables segregated by the length of time each receivable has been outstanding
D)evaluating the opportunity costs of a credit policy
E)tracking of both the number and the size of customer orders over a period of time

Question

Quizplus · Accepted Answer

Credit scoring involves using statistical models to evaluate a borrower's creditworthiness and risk of default. It is a process of quantifying the probability of default when granting credit to customers. The other options do not accurately define credit scoring.

Which One of the Following Best Defines the Term 'Credit