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Credit score thresholds as a source of inefficiency in lending processes

Author

Listed:
  • Inozemtsev Eduard

    (Gaidar Institute for Economic Policy)

  • Simonov Andrei

    (Gaidar Institute for Economic Policy)

Abstract

The increase in mortgage lending and the need to securitize and standardize mortgage debts creates a need to define rules for the application of individual household credit scores. Thresholds are widely used in mortgage lending, especially in large financial institutions. However, we know very little about how tamper-proof modern credit scoring methods are. We suggest looking into ways people can manipulate credit scores and suggesting ways that financial institutions can mitigate the problem.

Suggested Citation

  • Inozemtsev Eduard & Simonov Andrei, 2020. "Credit score thresholds as a source of inefficiency in lending processes," Working Papers wpaper-2022-1182, Gaidar Institute for Economic Policy, revised 2020.
    • Handle: RePEc:gai:wpaper:wpaper-2022-1182
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    File URL: https://www.iep.ru/files/RePEc/gai/wpaper/wpaper-2022-1182.pdf
    File Function: Revised Version, 2023
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    More about this item

    Keywords

    Russian economy; mortgage lending; mortgage debt; credit scoring;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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