Design and Development of Credit Scoring Model for the Commercial banks of Pakistan: Forecasting Creditworthiness of Individual Borrowers
Asia Samreen, Farheen Batul Zaidi

Abstract
This research study summarizes the loan evaluation method known as credit scoring.Credit scoring is a technique that helps banks decides whether to grant credit to applicants who apply to them or not.The main objective of the research was to evaluate credit risk in commercial banks of Pakistan using credit scoring models.The requirement of credit scoring models by commercial banks of Pakistan to assess the creditworthiness of individuals was described. A credit scoring modelwas developed called as Credit Scoring Model for Individuals (CSMI), which can be used by commercial banks to determine the creditworthiness of individual borrowers requesting for personal loans. The CSMI was explained along with a detailed look at different credit scoring models. The results of the developed credit scoring model were compared with the other statistical credit scoring techniques known as logistics regression and discriminant analysis. Type I and type II errors had been calculated for all the credit scoring models used. The results shows that the proposed model “CSMI”has more accuracy rate with no errors as compared to LR and DA.Also, several suggestions for further research were presented.

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