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The local government Social Credit System experiments are focused more on the construction of transparent rule-based systems, in contrast with the rating systems used in the commercial pilots. Citizens often begin with an initial score, to which points are added or deducted depending on their actions.
Credit scoring typically uses observations or data from clients who defaulted on their loans plus observations on a large number of clients who have not defaulted. Statistically, estimation techniques such as logistic regression or probit are used to create estimates of the probability of default for observations based on this historical data.
The scoring system has also been studied as a form of classification to shape an individual's life-chances—a form of economic inequality. [62] The classification scheme is necessitated by the loss of collective social services and risk. [63] The credit scoring system in the United States is similar to the Social Credit System in China. [64]
Organizations have used systems consisting of a mix of financial and non-financial measures to track progress for quite some time. [8] One such system, the Analog Devices Balanced Scorecard, was created by Art Schneiderman in 1987 at Analog Devices , a mid-sized semi-conductor company. [ 4 ]
Alternative credit scoring systems can use data such as rental payments, utility payments, subprime credit, and cell phone bills. [26] Other sources are social media activities, internet browsing history, employment history, student history, past loan application dates and locations, or the method one uses when purchasing gasoline. [27]
In Australia, credit scoring is widely accepted as the primary method of assessing creditworthiness. Credit scoring is used not only to determine whether credit should be approved to an applicant, but for credit scoring in the setting of credit limits on credit or store cards, in behavioral modelling such as collections scoring, and also in the pre-approval of additional credit to a company's ...
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Connect (financial services company) Credit bureau; Credit bureaus in the Philippines; Credit Karma; Credit scorecards; CRIF High Mark Credit Information Services; Criticism of credit scoring systems in the United States