Modern financial lenders are leveraging advanced technology to enhance their lending processes, particularly through the use of credit scoring systems. These systems utilize a wealth of customer data to assess the creditworthiness of borrowers, allowing lenders to make informed decisions and minimize risk. The article explores the evolution of credit scoring, tracing its origins to the late 1950s with the introduction of FICO scores, which have since become integral to lending practices. It details how credit scores are calculated based on factors such as payment history, amounts owed, and credit utilization, emphasizing the importance of maintaining a good credit score for favorable loan terms. Additionally, the article highlights the recent launch of the MYCREDIT SCORE system in Ghana, which aims to improve access to credit for individuals and businesses. While credit scoring systems offer numerous benefits, including improved financial discipline and economic growth, the article also addresses their limitations, such as data quality issues and the impact of negative credit history.
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