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Data Mining for Credit Scoring

Credit scoring is a technique to help the banks and other loan providers to decide whether they can give credit to the customer. It is through data and a data mining techniques that a credit scoring model is made. In the United States the credit scoring is based upon the credit report information that is given by different sources. Lending organizations and credit card companies have to make sure that bad debts are avoided and so they calculate the risk involved by using these credit scores.

Data mining techniques are crucial in getting good business intelligence and effective credit scoring. There are certain basic rules of data mining that should be followed to be effective. They are,

  • Using multiple models
  • Real time scoring
  • Use of open modeling technique
  • Transparency with customer

Credit scores provided by the Fair Isaac Corporation are the most used credit scores in the world today. Scores can be checked at http://www.myfico.com/

What is the type of information that is made available via these data mining techniques to the banks and other lenders? Well basically it answers certain questions about specific individual’s details like,

  • Number of credit cards with balances above the 80% of available credit
  • Last six months credit requisition event numbers
  • Date of opening of oldest/newest accounts
  • Number of new accounts last 12 months

KDD (knowledge discovery in data base) is a finer technique that helps in interpreting customer data. The behavior of the person can be predicted based on the data mining results/credit scoring and decisions are taken in the credit and finance industry. The client list of Fair Isaac Corporation includes over 1400 financial service providers, top global banks and the top 100 banks in the US.

Managed Outsource Solutions (MOS) is an Oklahoma based data processing and data mining company that offers a wide range of data entry services including, data conversion, data cleaning, online data entry, forms processing, web extraction, and KDD services for clients in the US, the UK, Canada and Australia.

About Julie Clements

Julie Clements

Joined the MOS team in March of 2008. Julie Clements has background in the healthcare staffing arena; as well as 6 years as Director of Sales and Marketing at a 4 star resort. Julie was instrumental in the creation of the medical record review division (and new web site); and has especially grown this division along with data conversion of all kinds.