PORTFOLIO SCORING

ASSESSMENT OF A BORROWER’S CREDITWORTHINESS IN THE BANKS' EXISTING CREDIT PORTFOLIO

Portfolio scoring is an analytical tool for assessment of a borrower’s creditworthiness within the existing credit portfolio of the bank. The result is produced in the form of a score.
The score value reflects the probability of the borrower’s default within the next 12 months on a loan that the Bank intends to grant as part of its cross-sales strategy. The scoring model is built using the logistic regression method. 

The service helps to achieve the following objectives:

  • Taking decisions on granting new credit products to existing borrowers;
  • Retail portfolio segmentation in terms of quality categories on the basis of credit histories of the borrowers.

Advantages:

  • The scoring can be easily built in decisioning systems for granting new products to existing customers;
  • The niche model is more precise in differentiating borrowers that potentially can be granted a new credit product;
  • The model is regularly enhanced and updated.

Peculiarities of the portfolio scoring:

  • The model was build using a population of borrowers who were granted a new credit product within the same bank;
  • The goal variable is achieving 90 dpd within 12 months;
  • The highest efficiency is achieved when the service is used in the batch mode as a part of cross-sale strategies. 

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