How Was The Credit Scoring Model Developed?

To develop a credit score model, a creditor first selects a random sample of it's customer base, or a sample of a similar customer base if their customer base is not large enough to derive adequate gauging data. The credit score model will then analyze it's customer base statistically to identify characteristics that can then be related to creditworthiness based on averages of it's current customer base. Then, each of these derived factors are then assigned a scoring weight value based on how strong a predictor it is of who may be a credit risk and who may not a credit risk. Creditor will often use their own credit scoring model with different scoring weight models for different types of credit lines.
 
Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics like -- race, sex, marital status, national origin, or religion as scoring weight factors. Creditors are allowed to use age in properly designed scoring systems. But any scoring system that includes age as a scoring factor must give equal treatment to elderly applicants despite their age.