Characteristic Selection

From Open Risk Manual


Characteristic Selection is an initial stage of Credit Scorecard Development that aims to create a sub-set of available set of characteristics. That subset will be used in the model development stage (although whether it is used in the final model is only determined later)


  • Informative about the Client (associated)
  • Economically Meaningful Role / Signal
  • Regulatory Compliance
  • Availability on ongoing base (Data Sourcing)
  • Temporal Stability
  • Orthogonal to other variables (uncorrelated)
  • Predictive of Default