Application and behavioural scorecards

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.

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.

Behavioural Scorecards: 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.

Application scorecards can help you to predict:

  • an applicant’s affordability (ability to pay)
  • potential future profitability
  • the likelihood to churn (attrition), etc.
  • In the case of a credit risk application scorecard the output is usually a numeric score provided for each applicant, with higher scores corresponding to lower levels of estimated risk.

Key Benefits

  • automate the application decision processes, reducing the cost of manually underwriting applications
  • facilitate the ability of businesses to make accurate, consistent, fact-based decisions

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