Banks pick customers for their own good, NOT yours, so the scoring process is about profit not risk. Of course, risk plays a part, as those unlikely to repay are a threat to profits. Yet even the most solvent may be rejected if they're unlikely to act in a way that'll generate profit for lenders.
No, it is absolutely about creditworthiness first. The probability of default or the likelihood of repayment. Different products might be available according to the score obtained, but each product will be priced according to the likelihood of repayment. Naturally some lenders have a greater appetite for risk than others, though not so much these days.
That said, no credit history is almost as bad as a poor credit history and I agree that this results in solvent applicants sometimes being refused credit.
Of course profit is a consideration.Risk and and profit are inextricably linked since all credit pricing is risk based, but the establishment of risk comes first and that's a long way from saying credit scoring is all about profit rather than risk. Last year I sat on the working party of a major card provider that revised it's scorecard with sexy new algorithms to predict the probability of default. The focus for the firm involved was very much about getting that number as accurate as possible.
Respectfully suggest that this is a better source for info on credit scoring than Mr Lewis
