A Dummy Variable in the context of Explanatory Variables, Credit Score Factor or similar applications of statistical risk models is any variable that takes one of two values (usually 0 or 1) to indicate the presence or not (True / False) of some effect or condition.
Other names used interchangeably are:
- Indicator Variable or Boolean indicator or Binary Variable
- Design Variable
- One-Hot Encoding (when created from a categorical variable via the method of [[wikipedia:One-hot | One-Hot]