easy · Frm Part 2 Credit Risk
When validating a credit scoring model, which of the following best describes the property of 'Calibration'?
- The extent to which predicted default probabilities match actual realized default frequencies.
- The stability of the applicant population over time as measured by the PSI.
- The process of ensuring the credit officer who approves the loan sits in the second line of defense.
- The model's ability to assign lower scores to non-defaulters than to defaulters.
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