This is the likelihood of default over a given time period. It is usually calculated as the probability of default (PD) over a year, or a point in time PD. Organizations using advanced approach modeling have to use a standard default definition. This is usually represented by scoring customers between 0 and 1. There are various types of PD models, but the most common ones are application and behavioral models. Application models, as the name suggests, are used when a customer is still a prospect wishing to join an organization. Behavioral PD models are used to assess and score existing customers. The data available for modeling tends to differ widely, as when building application models, the only available sources of information are what the prospect provides as part of the process and external bureau ratings. However, by the time you develop a behavioral scorecard, the customer has already on-boarded, and hopefully has made enough transactions for you to assess and understand the customer behavior.