Credit scoring is very important process in banking industry during which each potential or current client is assigned credit score that in certain way expresses client's probability of default, i.e. failing to meet his or her obligations on time or in full amount. This is a cornerstone of credit risk management in banking industry. Traditionally, statistical models (such as logistic regression model) are used for credit scoring in practice. Despite many advantages of such approach, recent research shows many alternatives that are in some ways superior to those traditional models. This master thesis is focused on introducing ensemble learning models (in particular constructed by using bagging, boosting and stacking algorithms) with various base models (in particular logistic regression, random forest, support vector machines and artificial neural network) as possible alternatives and challengers to traditional statistical models used for credit scoring and compares their advantages and disadvantages. Accuracy and predictive power of those scoring models is examined using standard measures of accuracy and predictive power in credit scoring field (in particular GINI coefficient and LIFT coefficient) on a real world dataset and obtained results are presented. The main result of this comparative study is that...

Background. Due to an increasing number of credit card defaulters, companies arenow taking greater precautions when approving credit applications. When a customermeets certain requirements, credit card firms typically use their experience todecide whether to grant them a credit card. Additionally, a few machine learningmethods have been applied to support the final decision. Objectives. The aim of this thesis is to compare the accuracy of logistic regressionclassifier, random forest classifier, and support vector classifier with the ensemblebagging classifier for predicting credit card approval. Methods. This thesis follows a method called general experimentation to determinethe most accurate classification technique for predicting credit card approval. Thedataset is taken from Kaggle, which contains information about credit card applications.The selected algorithms are trained with training data and validate themusing validation data then evaluate their performance on the testing data by usingmetrics such as accuracy, precision, recall, F1 score, and ROC curve. Now ensemblelearning bagging technique is applied to combine the predictions of these multiplemodels using majority voting to create an ensemble model. Finally, the performanceof the ensemble model was evaluated on the testing data and compared its accuracyto that of the individual models to identify the most accurate classification techniquefor predicting credit card approval. Results. Among the four selected machine learning algorithms, the random forestclassifier performed better with an accuracy of 88.41% on the testing dataset.The second-best algorithm is the ensemble bagging classifier, with an accuracy of84.78%. Hence, the random forest classifier is the most accurate algorithm for predictingcredit card approval. Conclusions. After evaluating various classifiers, including logistic regression classifier,random forest classifier, support vector classifier, and ensemble bagging, it wasobserved that the random forest classifier outperformed the other models in termsof predicting accuracy. This indicates that the random forest classifier was better atpredicting credit card approval.