Credit risk is a primary source of concern for institutions engaged in the lending business. When the borrower does not honor the contractual obligation to pay back the interest or the principal, the lending institution will suffer financial loss. Thus, proper management of credit risk plays an important role in sustainable financial operations and stability in the lending industry, including banks and other financial institutions. It is also a primary concern for regulatory authorities. For example, during the 2008 financial crisis, the underestimation of credit risk in subprime mortgage lending was a major contributing factor. Consequently, many modern regulatory frameworks have been proposed and are still being revised to actively detect vulnerabilities before they escalate into crises.