A consumer advocacy agency, Equitable Ernest, is interested in providing a service in which an individual can estimate their own credit score (a continuous measure used by banks, insurance companies, and other businesses when granting loans, quoting premiums, and issuing credit). The DATAfile CreditScore contains data on an individual's credit score and other variables.

Create a standard partition of the data with all the tracked variables and 50% of observations in the training set, 30% in the validation set, and 20% in the test set. Predict the individuals' credit scores using a single regression tree. Use CreditScore as the output variable and all the other variables as input variables. In Step 2 of XLMiner's Regression Tree procedure, be sure to Normalize input data, to specify Using Best pruned tree as the scoring option, and to set the Minimum # records in a terminal node to 244. Generate the Full tree, Best pruned tree, and Minimum error tree. Generate a Detailed Report for the training, validation, and test sets.

(a)

What is the RMSE of the best-pruned tree on the validation data and on the test set? If required, round your answers to two decimal places.

Validation set
Test set

(b)

Consider an individual who has had 5 credit bureau inquiries, has used 10% of her available credit, has $14,500 of total available credit, has no collection reports or missed payments, is a homeowner, has an average credit age of 6.5 years, and has worked continuously for the past 5 years. What is the best-pruned tree's predicted credit score for this individual? If required, round your answer to nearest whole number.

(c)

Repeat the construction of a single regression tree following the previous instructions, but in Step 2 of XLMiner's Regression Tree procedure to avoid overfitting, set the Maximum # of tree levels to 7. How does the RMSE of the best pruned tree on the test set compare to the analogous measure from part (a)? If required, round your answer to two decimal places.

How many more decision nodes does the best-pruned tree have compared to the best-pruned tree from part (a)?

Dataset can be found here: http://www.filehosting.org/file/details/724577/CreditScore.xls