ASSESSMENT OF DELINQUENT BORROWERS ON THE BASIS OF THEIR CREDIT HISTORY DATA
Collections scoring is an analytical tool for assessment of creditworthiness of a delinquent borrower on the basis of their credit history data. The result is produced in the form of a score.
The score value reflects the probability of the borrower’s default within the next 6 months for debts 1 to 30 days overdue. The scoring model is built using the logistic regression method.
The service helps to achieve the following objectives:
- Portfolio segmentation at the early delinquency stage for setting priorities and collections methods;
- Forecasting the risk level and future retail portfolio provisions;
Advantages:
- The scoring can be easily built in collections decisioning systems;
- The niche model is more precise in differentiating delinquent borrowers;
- The model is regularly enhanced and updated.
Peculiarities of the collections scoring:
- The model was build using a population of borrowers with delinquency up to 30 days on at least one of their loans;
- The goal variable is achieving 90-day delinquency within 6 months;
- Default value -111 is not contemplated for borrowers currently 90 days overdue.
For optimum use of the service, it is expedient to utilize the Scoring at early stages of delinquency.
