How it works
Application scorecards are statistical models typically developed using an institution’s historical data for the relevant product, if sufficient such data is available.
If relevant historic data is not available, for example if the scorecard is required for a new product, then Experian can provide representative generic data from their extensive data sources.
After the data has been extracted and verified it is critical to design a modelling data sample that is representative of the target portfolio and allows the resultant scorecard to meet the business objectives. This is achieved through detailed analysis of the available criteria, portfolio stability and behaviour. The model can then be developed using several methodologies, with linear and logistic regression proving to be the most common. Experian has more than 30 years of experience in successfully developing credit risk models for financial institutions.
In addition to your data, captured at the point of application, the most predictive application scorecard developments include credit bureau data which provides a detailed view of credit history. In addition to scorecards, Experian can provide extensive retrospective credit bureau data to support application scorecard developments.
Retain and grow the right customers for your business
Do you know who your most valuable customers are? Are any of your customers struggling to repay their debts with you or elsewhere? If you want to activate the right customers, whilst mitigating the risks, knowing how and where to focus your efforts by maximising the use of all available data and insight in everyday decisions is key.
How does it work?
We develop statistical models combining your data with our data alongside expert consultancy to predict how a customer will behave in the future. Behavioural scoring is used throughout the life of a customer relationship to inform management strategies for each customer, whether managing and supporting customers with financial difficulties or extending the relationship with customers through enhanced features or new products.
Improve collection and recovery rates
When accepting a new customer’s application for credit, or agreeing to extend credit for existing customers, assessments should be made to indicate the likelihood that the customer will be able to manage financially and will be able to comfortably repay the amount borrowed.
In addition, it is important to recognise that customer circumstances may change over time and lenders will need to understand them on an on-going basis in order to offer appropriate support throughout the relationship.
In today’s climate, the prioritisation of accounts in collections plays an integral part in controlling bad debt, knowing who to prioritise and in treating customers fairly. For example, how frequently and through which channel to contact them can be difficult balance to strike.
With increasing pressure on lenders to illustrate and stimulate small business lending are you optimally placed to clearly evaluate requests for credit, set appropriate lending terms and make confident lending decisions?
Commercial scorecards can be used at the point of acquisition to accurately assess risk and help lenders to make decisions on whether to lend to businesses.
In addition, they can be used within a customer management environment and are often used to support with Basel provisioning.
Experian have a wealth of data sources and experience in combining these to develop bespoke commercial scorecards that can help you, as a lender, achieve business requirements.