Credit Cards and Risk

Richard Boire

Chapter Chapter 23 in Data Mining for Managers, 2014, pp 185-191 from Palgrave Macmillan

Abstract: Abstract The birth of credit cards in the late 1940s and 50s led to the demand for techniques and processes to reduce overall credit losses. The bulk of this responsibility rested on the credit operation and collections area of these organizations. Business rules were the norm; that is, if a person’s credit reached a certain level, various procedures were introduced to reduce the likelihood of the debtor going into default. Examples of these procedures could range from a phone call indicating the organization’s concern with a client’s current credit risk status to actually shutting down the account until payment was received. These procedures were successful in reducing overall credit losses. However, given the amount of these losses on the credit companies’ books (in many cases it was estimated to be in the tens of millions dollars), senior company executives were always considering other techniques and approaches to reduce these losses even at a marginal level.

Keywords: Credit Card; Credit Risk; Credit Score; Credit Report; Credit Card Company (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-40619-4_23

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DOI: 10.1057/9781137406194_23

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