What is the Gini Coefficient?

Created by Katie Deverill, Modified on Wed, 19 Oct 2022 at 06:13 PM by Katie Deverill

Gini Coefficients is a statistical measure used to evaluate how powerful our scorecards are in predicting who will fail within the next 12 months. The Coefficient ranges from 0.00 to 1.

The more effective a credit score, the better it is at giving lower scores to riskier applicants, and higher scores to safer applicants. However, it is impossible to devise a scorecard which could perfectly predict all future insolvencies, which would not also inadvertently classify some stable businesses as high risk.  To avoid this, we create a scorecard which finds the most optimal balance between business risk prediction and opportunity maximisation.

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