Calculating weight of evidence and information value
Abstract
This chapter illustrates some variables that are highly correlated with delinquencies in mortgages. Such variables include the percent of credit card limits used right now, the number of trade lines a borrower has that never reached 2 months delinquencies, the total of all limits, the total of installment limits, the number of recent inquiries, and the number collection accounts. I show how we calculate the weight of evidence of each bin of each variable and the calculation and illustration of the information value of the whole variable. It is a practical foray into key parts of making a credit score.
Keywords
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