Credit scoring model based on Baum-Welch method

Nowadays, credit scoring has studied both in academic world and the business community. Many modeling techniques have been developed to be useful in domain of credit scoring. This paper establishes a credit scoring model via an iterative procedure approach, Baum-Welch method. It is a novel method applied to solve credit scoring problems, and to explore a good accuracy model. The algorithm is successfully applied to a real credit problem, and the application procedure is illustrated in German data set. The experiment of this model, is proved to its high efficiency and evaluated its significant value on credit scoring.