An analysis of consumer credit numerical scoring systems and the effect on military servicemen

Abstract

The four objectives addressed were the description of credit scoring development, the identification of management uses and attendant disadvantages of scoring, an evaluation of the current and potential uses of scoring in banks and credit unions, and the determination of whether military servicemen are adversely affected by scoring. The conclusions reached were that the advantages of scoring appear to especially outweigh the disadvantages for large volume lending institutions with access to computers. A survey of the country's 100 largest banks and 100 largest federal credit unions indicated an apparent slowing of scoring growth. A sample of automobile loans of active duty servicemen scored on the systems of two commercial banks and one credit union provided limited evidence that servicemen are not treated fairly by credit scoring.