The model is trained on instances whose category membership is known, and then uses the same algorithm to determine the category for the new observation.
Credit scoring is one of the most well-known examples of statistical classification. A credit score is a metric based on the analysis of credit files of a person to prove their credit-worthiness. It is used to classify applicants for credit into 'good' and 'bad' risk classes. Credit scoring is used by banks, government departments, and insurance, mobile phone, digital finance, and other companies.