Application and Commercial Scorecards

Commercial Scorecards

Tools to help you make confident lending decisions and set appropriate lending terms by predicting the stability of client businesses.

Application Scorecards

Application Scorecards are tools that allow organisations to predict the probability that an applicant will behave in a particular way, helping businesses to make effective automated decisions.

The most commonly used application scorecard for credit, predicts the risk of a customer paying or not. This supports you as a business to make automated, accurate and consistent decisions on whether to approve, review or decline applicants.

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.

Our scorecards can help you with:

  • Improved lending decisions
  • Supporting regulatory requirements
  • The potential to offer the right product terms (including decisioning)
  • Managing credit risk
  • Incorporating new data sources into your decisions to increase predictive capability

In addition, they will:

  • Reflect the latest market conditions
  • Provide an up-to-date profile of your customers – new and current
  • Optimally blend commercial Delphi data, commercial CAIS & consumer data from Directors/Proprietors/Sole Traders (where applicable) along with any additional necessary data
  • Provide a multi-purpose use by supporting Basel provisioning in addition to predicting risk - there is a proven relationship between Commercial Delphi score and profitability of debt.
  • Reduce the number of referrals and therefore associated underwriting costs
  • Help you make faster decisions that in turn can improve customer experience

How it works

A range of modeling algorithms are available including logistic and linear regression modeling techniques.

Considering all available predictive data items, a scorecard will be produced that combines these to output a score which accurately predicts any associated risk or concern of the applicant based on their profile and your policy and scoring rules.

This score can then be incorporated into existing processes, allowing increased automation of your decisioning.

Find out how we can help your business thrive

Scorecard Health Check - Ensure your scorecards are still fit for purpose

We all work in a constantly changing market place and an evolving economic climate. Staying one step ahead of emerging trends with on-going analysis of your scorecards and decision-making policies will help ensure that you safeguard your customers, protect your business and your cash flow.

Our scorecard health check service will provide you with a clear view of the efficiency and cost-effectiveness of how your scorecard is used within your current decision making process. It provides critical insight that indicates your exposure to risk, the strengths of your current decision process and efficiencies that will help you stay one step ahead of the competition.

Experian will work with your organisation to customise a scorecard health-check report that will highlight potential opportunities to enhance your decision-making.

There are four key stages to the Health-Check service:

  • Benchmarking against market peers - Provides insight into how your portfolio compares to your peers within the market. This could highlight where to focus actions as part of the overall road-map
  • Is your scorecard performance optimal? Review how scorecards are performing against business goals and expectations.
  • Can policy and strategy rules be enhanced? Ensure that your current policy and strategy rules are being applied effectively and taking into account current market conditions which may impact scorecard discrimination and decision-making.
  • Enhanced policy rules can help to focus underwriters on applications where they can have the most benefit.
  • Assess potential opportunity from new data sources - Review of where potential uplift could be obtained through provision of new / different data assets.

Given early signs of economic growth recent emphasis has been on increasing approvals through acquisition strategy. Experian has been able to illustrate that re-developing acquisition scorecards coupled together with the usage of new data assets could deliver in excess of a 5% increase in approvals for no predicted impact to your exposure to risk.

The benefits it can give you

Our customised solutions aim to give you the insight you need to use within your strategy and planning, specifically providing you with:

1.Regulation support

Supports your case for a reduction in capital requirement

Avoidance of penalties

Reduced effort required internally to support reporting overheads

2.Operational planning

Maintain levels of collections performance as interest rates rise

Case prioritisation and specific collections paths

Determine level of additional resources required to service portfolio

3.Risk appetite

Manage acquisition strategy and lending policy to reduce concentrations of customer base in current and future high risk segments

Project arrears and loss rates to refine risk appetite statement for risk committee and regulator

4.Mitigation of future risks

Identification of customers at risk in the future

Pro-actively reduce exposure or restructure to reduce monthly payments

Target customer service calls or financial reviews

An Experian scorecard health check is customised to the specific requirements of the business. It can be applied where any level of decision-making occurs through the credit lifecycle – from acquisition to collections.

The comprehensive report incorporates a benchmarking summary of your strengths and weaknesses in comparison to your market peers.

Product features

  • Up-to-date insight and data to support accurate and timely decisioning
  • Understand strengths, opportunities, weaknesses and threats through a detailed analysis of your current scorecard suites
  • A report to focusing on your business objectives
  • Holistic review across the customer lifecycle
  • Benchmark against your competitors and market peers
  • Identify business challenges and address them effectively
  • Clear improvement strategy reflecting priority and ease of implementation