Consider the statements below about credit score models used to analyze the credit risk of borrowers such as Altman’s Z score (business lending) and the FICO score (consumer lending). Which of these statements is correct?单项选择题

Credit scores are based on statistical relationships that should remain stable across different economic settings. Therefore, there are no major challenges in using existing credit scores to analyze borrowers’ risk of default after a significant change in the economic environment.

In the Altman model, an increase in the ratio of working capital to total assets increases the credit score and reduces the default risk. Intuitively, this captures an increase in the borrower’s liquidity.

Standardized credit scores such as the FICO score are not commonly used in the mortgage market. In this market, lenders primarily rely on proprietary credit scores when making decisions.

In the Altman model, an increase in the ratio of EBIT to total assets increases the credit score and reduces the default risk. The increase in this ratio captures a greater equity cushion by the borrower against insolvency.