What proportion of the variation in the number of missed payments can be explained by the relationship between credit score and default rate that your line describes?
Trenton Bank has a scoring system that it uses to evaluate new loan applications. You’ve been tracking the number of late or missed payments for a sample of “high risk” customers who received loans and have had scheduled payments over the past 60 months. The table below shows the number of late or missed payments and the credit scores for the four customers in the study.

  • CreatedJuly 16, 2015
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