Stefania Albanesi returns to CRC to create a new model credit score

Two years ago Pitt economist Stefania Albanesi co-authored a paper refuting conventional wisdom that the 2007-2009 global credit crisis was triggered by mortgage defaults of borrowers with low credit scores. Albanesi found that borrowers with higher credit scores accounted for an outsized percentage of mortgage defaults. Albanesi and graduate student Domonkos Vamossy asked two questions – Why didn’t credit scores predict default particularly well? Can one create credit scores that predict better? They developed a deep learning model to predict consumer default that outperforms standard credit scoring models in accuracy, a model that could help policy makers reduce consumer default and large-scale risks.

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Pitt economist Stefania Albanesi