Credit scoring systems:
Credit scoring systems:
Credit scoring systems serve multiple functions. They evaluate an applicant's creditworthiness mechanically, based on key attributes of the applicant and the specifics of the transaction. Additionally, regulatory agencies assess these systems to ensure they are empirically derived and statistically sound. They also examine the bank’s policies concerning the use of the credit scoring system, the training provided to bank employees, and the frequency of overrides in the system. Thus, both statements are accurate descriptions of the roles and evaluations associated with credit scoring systems, making 'Both of these' the correct answer.
Credit scoring systems are indeed used to evaluate an applicant's creditworthiness mechanically, based on key attributes of the applicant and aspects of the transaction. Additionally, regulatory agencies evaluate credit scoring systems to determine whether they are empirically derived and statistically sound. They also examine the bank's policies on the use of the credit scoring system, training of bank employees on the use of the system, and the number of high-side and low-side overrides of the system. Therefore, both statements accurately describe aspects of credit scoring systems and their evaluation.