In the `Credit` data in the `ISLR` package it contains 400 customers and information on their credit...

Question

In the `Credit` data in the `ISLR` package it contains 400 customers and information on their credit history. Build a model using all the predictors (11 variables) to better understand factors that influence the `Balance` variable, which is average credit card balance in USD. Using the information in your model:

* Discuss all the independent variablesseparately.

* Discuss why you chose the variables you choose to put in the model (After figuring out the best fit model using all the predictors).

* Explain any concerns about use of certain variables in the model?

* Discuss how your model was created and any insights you can provide the customer based on the results.

*HINT: Adding Gender and/or Ethnicity could be controversial or illegal in some uses of this model, you should discuss your decision on these variables and how it effects the organizations ability to use your model for prediction or inference.*

Monica · Accepted Answer

Solution 
1) All independent variables 
ID – Identity number 
Income – Income of an individual in $1000’s
Limit – Card limit
Rating – Credit Rating which is given by the bank 
Cards – Number of credit cards a person is holding
Age – Age of an individual (in years)
Education – Number of years spend in education 
Gender – A factor with levels Male and Female 
Student - A factor with No and Yes indicating whether the individual was a student if yes then labelled as yes or vice versa.
Married – A factor with levels No and yes indicating whether the individual was married if yes then labelled as yes or vice versa. 
Ethnicity –African American, Asian and Caucasian indicating the individual’s ethnicity that is from which a person belongs. 
2) Income, limit, Rating, Age, student are chosen as variables that will be included in the regression model. These variables originate from the demographic dataset and are not implied to be used in the dataset. The person coming from a foreign country does not tell us what its average credit card balance is.

In the `Credit` data in the `ISLR` package it contains 400 customers and information on their credit history. Build a model using all the predictors (11 variables) to better understand factors that...

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