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Credit scoring

Task

Credit services gain popularity every day. The market is regularly replenished by new products: credits for individuals (consumer, automobile, educational, mortgage, credit cards), small business credits, partnership programs, etc. with huge amount of terms and proposals within the framework of each category.

Launching of modern mass crediting, fast and convenient for customers, involves numerous problems, the first and the most important one is the problem of credit risks management. Credit risk is a possible loss that can occur due to failure to pay or overdue payment of customer’s financial liabilities. Credit risks management is closely associated with the process of borrower complex assessment also known as credit scoring..

In some companies credit scoring procedure is executed by specialists manually yet and is based on formal expert assessments, shallow research of behavioral as well as social and demographic data, incomes, services history, etc. Applications flow increases and such an approach demonstrates its low efficiency – the amount of resources is limited, assessment and checking methods constantly change, employees and, therefore, knowledge migrate, new fraud schemes are developed, market environment changes.

Credit organizations have to search for new methods increasing the efficiency of credit scoring processes to maintain risks at the acceptable level and reach target goals.

Solution

Advanced analytics, including applied statistics, Data Mining and forecasting methods, allows to get a deeper understanding of borrower’s characteristics and risks associated with him/her as well as assess what characteristics can lead to delays, defaults and “bad” debts in future. Faunus Analytics has a vast experience in solving branch tasks relating to credit scoring:

    • Application credit scoring
    • Behavior credit scoring
  • Periodic risks assessment on the basis of a credit portfolio
  • Collection scoring

Below you can see a procedure of credit application processing in modern organizations and a list of stages that can be significantly improved by means of advanced analytics. All information represents generalization of actual project experience gained as a result of cooperation with financial and telecommunication companies.



Typical business procedure of credit application processing



If you want to find out more information about each stage contact us or leave your request for services.

See also