Model validation is a critical activity to verify that credit scorecards are working as intended and that model usage is in line with business objectives and expectations. A regular model tracking and validation process can ensure that consistent and optimal model-based decisions are being made. It can also serve as an early warning system for identifying when a change may be necessary, whether it be an adjustment to a score cutoff strategy or a full model redevelopment. The process can be a straightforward exercise when one model is being used in isolation…
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