Behavioral Credit Scoring and Financial Inclusion: Rethinking Risk, Data Ethics and Opportunity in the Age of AI

This research offers a unique & comprehensive analysis of behavioral credit scoring frameworks and their global implications for financial inclusion. Traditional credit scoring approaches ignore billions of potential consumers in the formal financial system simply because they rely on previous repayment behaviour and records of formal employment. By exploring how alternative data sources, AI, and behavioural analysis are changing the game for credit risk assessments, especially for the underbanked, underexplored and underserved population, this research examines case studies from Namibia, Malaysia and Southeast Asia, interviews with practitioners, and international observations of the credit market. The research begins to develop an ethical framework for applying behavioral scoring, examining the best practices and lessons learned from the process of its development and application. The most impressive findings establish that smartphone metadata; behavioral biometrics; and psychometric indicators can facilitate a credit rating while presenting serious concerns about data privacy, algorithmic transparency, and digital equity. Ultimately this research aims at providing a multi-dimensional scaffold that addresses inclusive, intentional, responsibly, and scalable systems of credit delivery amidst guides of responsible governance in diverse jurisdictions combined into real-world narratives.