Credit Scoring Models: Understanding Lending Use & Limits

Credit scores are embedded in nearly every lending decision, yet they are often relied on without a full understanding of what they measure and where they fall short. Credit scores do not capture the full picture of borrower risk, and overreliance on them can lead to inconsistent decisions, higher delinquencies, and weaker portfolio performance. This in-depth session will explore traditional and newer credit scoring models, as well as the increasing use of borrower analytics to enhance credit risk assessment. We will focus on practical application, showing how to integrate credit scores with other risk factors to improve credit quality, reduce losses, and strengthen examiner confidence. When properly used within a broader risk framework, credit scoring models can support better risk management, more consistent underwriting, and stronger lending outcomes.