What is a good online scoring

What requirements should the scoring system for online lending meet
Good scoring in online is not just a model, it’s a complete strategy management system.
The implementation of scoring platforms is one of the main activities of our team. Quality scoring is one of the main investments of companies providing credit to individuals and legal entities. High defaults on loan portfolios directly cause companies to close, sell or write off businesses.

So, a good online scoring is one of several components:
  1. A strong model. Of course, a model that qualitatively predicts the likelihood of default by the borrower should be sealed inside the scoring. The model is strongly process-related. Universal model of default probability estimation can give different Gini depending on the flow of incoming applications (traffic quality) and on the settings of loan servicing processes (repayment convenience, recovery quality, stability of internal systems)
  2. Change management system. Online flow is highly sensitive to changing market conditions. Reasons 2 - competition and in principle the same type of product, the concentration of online frod. The risk manager responsible for online performance should be able to put simple clips on the streams in real time, configure complex rules and implement them in the shortest possible time. Not only risk takers but also marketers depend on how quickly the company adapts to change. Nature is very simple. Scoring affects cost-per-click, default rate, unit economy. Therefore, a good scorer is always a bit of a marketer
  3. Portfolio Strategy Management System. First, few people are interested in quantitative defaults. It’s much more important for us to understand how the project’s economics work in terms of money. Quantitative expression, of course, is important, because. the client is converted to second, but without earning on customers, the growth of the base will not worry us. Second, the loan portfolio is closely linked to liquidity. And if we are talking about starting positions with a limited budget for the project, then liquidity and product strategies need to be managed almost daily. Thus, another requirement for scoring is the ability to manage the product strategy in a time-limit payment schedule
  4. Scoring cost management system. Virtually any external data request involves costs. Each data source has its own weight in the final assessment. Since the online flow is highly variable, the contribution of each data source to the final assessment is also changing. For this reason, the risk taker continuously assesses the quality of data sources, and therefore, within the platform it should be able to change the strategy of accessing external information sources, minimizing the total cost of queries if defaults are not reversed and profits from the unit are maximized
  5. Reporting System. It was previously described that a risk taker in an online environment should combine a variety of functions, namely, to be a scoring player, a portfolio analyst, a grocery store, a good marketer, and a business analyst. It is certainly difficult to combine such a broad competency profile in one specialist. But you can help the risk manager adequately assess the situation and understand where the growth point is, through online reporting tools. For this reason, inside the scoring platform we recommend to have basic reporting on rolls-rates, unit-economies, vintages, spills, main financial indicators. This will help the rules on key indicators to localize credit risks and adequately respond to them.
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