In making credit decisions, which statement best describes how scores are used?

• A. Higher scores are typically better and represent lower risk
• B. Approve above a certain score
• C. Review scores below cutoff to attempt to broaden the scorecard
• D. Below cutoff approvals can be used to test the model

Answer: (A)

Scores in credit decisions express the likelihood of default, and higher numbers indicate lower risk. This means a higher score is generally better because it corresponds to a borrower who is less likely to default. That fundamental meaning is why the statement about higher scores being better and representing lower risk is the best description.

In practice, lenders use a threshold to decide approvals, but that is an application of the score rather than what the score itself conveys. The other options describe actions or model-development steps (like using scores to approve above a cutoff or testing the scorecard with below-cutoff approvals), which are operational or experimental uses rather than how the score should be interpreted.