The aim of this study attempts to introduce how a credit scoring model can be used to help finance/leasing companies manage and reinforce their auto loan approval process. Credit scoring models are most frequently applied methods adopted by banks when evaluating loan applications. This is a data-driven approach and it is built by using historical data and statistical techniques to identify the possibility that the failure by borrowers to make repayments in accordance with the term of a loan. Finance/leasing companies focus on the lending business in high risk borrowers. Default risk is what finance/leasing companies have to be concerned about.
In this study, a real data of auto loan product was used to build a credit scoring model. The logistic regression is the most common method to establish the model and the model validation was also conducted to prove the effectiveness. The paper presents a credit scoring model that provides finance/leasing companies an objective way to measure and manage the credit risk. The model has also identified the risk factors associated with measuring the credit risk. This thesis illustrated how the credit scoring model works and it is recommended financing/leasing companies should develop their own credit scoring model.

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