See the approval rate and bad rate trade-off
Enter your score bands with their goods and bads to see the bad rate at every approval rate. Add a second score to compare how many more applications it could approve at the same bad rate.
Bad rate
Approving 70% of applications gives a bad rate of 1.35%. Keeping the bad rate at or under 2% allows an approval rate of 83.2%.
At 70% approval, the new score's bad rate is 0.75% against 1.35%, a change of −0.60 pp. At a bad rate of 2%, it approves 89.3% against 83.2%, or 616 more applications a month.
Strategy curves
The dark line is the score you use, and the orange line is the new score. Each shows the bad rate at every approval rate, and dashed lines mark your targets.
Cut-offs
| Cut-off | Approval rate | Bad rate | New score cut-off | Approval rate | Bad rate |
|---|---|---|---|---|---|
| Approve from >=840 | 14.2% | 0.35% | Approve from >=840 | 14.5% | 0.11% |
| Approve from [800,840) | 27.8% | 0.47% | Approve from [800,840) | 28.5% | 0.17% |
| Approve from [760,800) | 40.8% | 0.65% | Approve from [760,800) | 41.8% | 0.28% |
| Approve from [720,760) | 53.1% | 0.87% | Approve from [720,760) | 54.4% | 0.39% |
| Approve from [680,720) | 64.6% | 1.15% | Approve from [680,720) | 65.7% | 0.60% |
| Approve from [640,680) | 74.9% | 1.52% | Approve from [640,680) | 75.8% | 0.93% |
| Approve from [600,640) | 83.7% | 2.03% | Approve from [600,640) | 84.2% | 1.43% |
| Approve from [560,600) | 90.7% | 2.70% | Approve from [560,600) | 90.8% | 2.16% |
| Approve from [520,560) | 96.0% | 3.62% | Approve from [520,560) | 96.0% | 3.28% |
| Approve from <520 | 100.0% | 4.86% | Approve from <520 | 100.0% | 4.86% |
The copied cells paste into a decision table with the score band as the condition and approve or decline as the result.
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The next step is to use the chosen cut-off in the credit decision and run the new score beside the current one on live applications before it takes over. Start free
Show formulas
Approval rate = Approved ÷ All applications Bad rate = Bads approved ÷ Approved Approving part of a band counts its goods and bads in proportion. Approval rate allowed = The highest approval rate whose bad rate stays at or under the target
Outcomes exist only for approved loans, so the curve below today's cut-off rests on the data you have. The scores are compared using their own band counts, with no application-by-application comparison.
Approval rate and bad rate trade-off
At each cut-off, approval rate is applications approved divided by all applications. Bad rate is bads approved divided by applications approved, and the strategy curve shows how the two rates change across score cut-offs.
The curve shows the trade-off as you change the cut-off. Use the target rates to see the bad rate at an approval rate or the approval rate allowed by a bad-rate target, then compare a second score.
Common questions
How do approval rate and bad rate change across score cut-offs?
At each cut-off, approval rate is applications approved divided by all applications. Bad rate is bads approved divided by applications approved.
What does a strategy curve show in credit scoring?
A strategy curve shows the bad rate at each approval rate across the score's cut-offs. The curve makes the trade-off visible as the cut-off changes.
How can I compare a new scorecard with the current one?
Enter bands for both scores to compare their bad rates at the same approval rate and their approval rates at the same bad rate. The comparison uses each score's own band counts, not application-by-application results.
How many more applications can a better score approve at the same bad rate?
The calculator compares approval rates at the target bad rate. Add a monthly application volume to see the difference in applications approved a month.
How do I find the cut-off for a target approval rate?
The table shows the current score's cut-off at the target approval rate. It marks the fewest bands from the safest band that reach the target.