Creditworthiness Thresholds

Requirements Clarification & Assessment

1. Objective Understanding:

   • The primary goal is to determine if setting the threshold at 83% leads to overestimating or underestimating the creditworthiness of the population.
   • Understand the implications of margin of error (81% to 85%) and how it affects classification accuracy.

2. Model Evaluation:

   • Assess the calibration of the credit assessment model.
   • Determine the impact of the margin of error on classification decisions.

3. Business Context:

   • Identify business goals, whether to maximize revenue, minimize risk, or balance both.
   • Evaluate the cost implications of false positives (FP) and false negatives (FN).

4. Population Analysis:

   • Analyze the distribution of scores around the threshold.
   • Understand demographic and financial characteristics of the population.

5. Statistical Metrics:

   • Evaluate model performance using metrics like F1 score, precision, and recall.
   • Consider hypothesis testing to statistically assess the threshold impact.