The Role of Credit Scoring Models in Enhancing Financial Inclusion and Loan Accessibility for Small Borrowers

Posted: Apr 27, 2022

• Sophia Smith
• Owen Flores
• Noah Young

Abstract

This research presents a novel approach to credit scoring that integrates psychometric profiling and social network analysis to address the longstanding challenge of financial inclusion for small borrowers with limited credit histories. Traditional credit scoring models have systematically excluded millions of potential borrowers from formal financial systems due to their reliance on conventional financial data, creating significant barriers to economic participation. Our methodology combines behavioral economics principles with machine learning techniques to develop a multi-dimensional scoring framework that evaluates creditworthiness beyond traditional financial metrics. We introduce the concept of 'social capital quantification' through digital footprint analysis and implement a dynamic scoring mechanism that adapts to changing borrower circumstances. The study demonstrates that our integrated approach achieves 34