Together with the credit reports, BIK discloses score information to the banks and credit unions which is used in the credit decision-making process.

The use of the score by the organisations cooperating with BIK guarantees its clients the following benefits:

• acceleration of the decision-making process,
• objective approach using the same criteria,
• automation of the credit risk assessment process by the banks and credit unions,

The score method is used to calculate the score. BIK provides the score services to the banks and credit unions which they use in the credit decision-making process. With the score increasing use in the banking sector, it is applicable to nearly all clients who already have or apply for the credits. Therefore, it is recommended to become more familiar with this topic.

What is a credit score?
A credit score is a method of assessment of the credit risk. It consists in identifying the Client's credit worthiness by comparing his profile with the profile of the Clients who already have been granted credits. The closer the Client's profile to the profile of the well performing Clients, the higher the Client score.

Do you know? The origins of the score system are not in the banking sector but... mail-order sale. Originally, the score system was used in the 1930s by the American mail-order companies. A dynamic growth of the credit card market in the 1960s resulted in widespread promotion of score methodology in the United States. In Western Europe, credit score has been used by the banks since the end of 1970s. The credit score has been and is used not only by the banks but also by the issuers of various types of cards such as credit cards, club cards, travellers' cards, etc. Similar methods are also used in marketing, insurance and even in the medical diagnosing sectors. In Poland, credit worthiness assessment methods are increasingly applied by the banks .

What with and how is the score calculated?
A score is a number assigned to the Client as a result of use of the application of the credit risk score . The score is calculated on the basis of the data about the Client. In the case of the score offered by credit bureaux (such as BIK) the data are from the data sets submitted by the banks/SKOK credit unions . To calculate the score a relevant carefully developed mathematical formula is used.

Do you know? The final score is a total of all the points scored by the Client in the individual components of his profile (characteristics) In the case of the credit bureau score such characteristics may include, for example, the longest delay in repayment of the Client's credits so far; The well performing Client who never had any amounts in default will score more points in this component than a person who happened not to pay for two or three consecutive months. Another example of behaviour which may have adverse effect on the score is exceeding the credit card limit.

After a second thought, the relationship between the Client characteristics and his credit worthiness should no longer be a surprise. Similar dependencies are generally known and used in other areas, such as for example insurance. Research proved that e.g. young drivers are more likely to cause accidents than older drivers, i.e. the probability of an accident – and thus a risk for the insurance company – depends on the age of the driver. Therefore, the insurance companies usually increase the premiums for the young drivers which means the young drivers have to pay higher TPL insurance premiums. On the other hand, the persons who may boast of a collision free history in the recent years, are very likely not to cause an accident in the foreseeable period of time and therefore may count on discounts on the insurance premium related to their performance as drivers. Similarly, there is a great chance that the persons who have repaid their credits within the agreed deadlines so far, will continue to perform well and therefore may receive better score. Besides the historical performance, other Client characteristics may be identified which also determine the probability of credit repayment.

How is the score used by the banks/credit unions?
Banks/credit unions use the score for quick, precise, transparent and objective evaluation of credit risk related to their Clients irrespective of the time and person performing the analysis. Subject to the credit score may be both the current Clients as well as the persons who have applied for the first time to a bank/credit union credit union for the credit. Using the score system, the credit granting decision is made much sooner than using the traditional risk assessment methods. Thus, the time of consideration of the Client credit application is shortened. Further, the use of score enables the banks/credit unions to lower the credit decision process costs which is also reflected in more attractive credits offers to Clients. The score enables the banks/credit unions to manage the credit risk in the way allowing maintaining high level of security, which is of vital importance for the Clients.

What are the Client advantages deriving from the high score? The higher the score, the smaller the chances of the Client going bad in the future. The high score Clients are more welcome to the banks/SKOK credit unions , as they are perceived as more reliable and low credit risk consumers. They are the banks/Credit unions preferred borrowers. In a number of banks/SKOK credit unions , the high score Clients may hope for a special treatment: they are not required to provide a huge number of documents and the price of the credit offered to them may be lower in comparison with other Clients. In one word, the Clients who have a good score may expect attractive offers from the banks/SKOK credit unions.

In all the EU countries, the lenders have access to the databases which help them evaluate credit worthiness of the Client. Organisations which have such databases are referred to as the credit bureaux, credit registers or credit reference agencies. They collect credit histories of the borrowers and use them to assess the risk related to the granting of the credit to a particular Client.