Scoring is a computer system for processing and analyzing customer data, which is based on statistical tools. The scoring mechanism analyzes about a hundred parameters, each of which affects the decision in a minor way. It is thanks to the combination of these parameters that the most accurate assessment of the client's creditworthiness is achieved.
Scoring greatly facilitates the decision-making process on a loan application. In automatic mode , it solves the following tasks:
- identifies eligible users - those who can apply for a loan;
- credit scoring in banks anticipates the future behavior of potential borrowers - deduces possible behaviors of an applicant;
- assesses the probability of losing a client in the future - whether he will be loyal to the company or a one-time appeal.
The main methods of assessing the creditworthiness of the borrower
Methods of assessing the creditworthiness of the borrower and reducing credit risks are very diverse. Lenders in Denmark individually determines significant and insignificant indicators based on previous experience, statistical data and new technologies. The main methods are the following:
- verification of the borrower by the method of financial coefficients - the analysis of the coefficients derived by the company individually and determined as significant is carried out;
- cash flow analysis method - the user's cash flow is analyzed - salaries, social benefits, active and repaid loans, the regularity of utility payments;
- the method of business risk analysis - takes into account the scope of employment, the duration of work at the current place, etc.
- of the newest ways, it is worth mentioning credit scoring based on social networks. Some financial organizations, when filling out the questionnaire, necessarily require linking a personal profile in social networks. Social media pages give a lot of information about a person - what he is, what he is interested in, who his friends are, etc. Therefore, social networks are also included in the scoring system for assessing the creditworthiness of the borrower.
How does credit scoring work?
Scoring processes a variety of indicators and, based on that, outputs a score that allows you to give an answer to the request. If it is in the range of acceptable values, the applicant receives funding.
How to calculate credit scoring?
It is very difficult to calculate the borrower's credit score independently. The study is subject to a variety of criteria, both the most common - age, gender, marital status, and unusual - time spent on the site, etc. In addition, the difficulty lies in the fact that these indicators differ significantly in different financial structures.
Assessment of the creditworthiness of a debtor who had problem loans in some banks occurs in other ways - more carefully than the study of the data of a user with a positive credit history.
Different lenders in Denmark build credit scoring differently as a tool for assessing the creditworthiness of bank borrowers. But there are also general requirements that should be met:
- specify truthful and up-to-date information in the application;
- pay attention to the conditions of the organization regarding the applicant's age and citizenship - these are the points for which the request is eliminated instantly;
- in addition, credit scoring in the bank is concerned about credit history - this factor is almost always important and the higher the rating, the higher the probability of getting approval.
If a person had a problem loan in the past, but it was closed, a scoring assessment of the creditworthiness of an individual will establish that the problem has been solved - such a client has every chance of getting approval for a loan.
Is there a chance to cheat the credit scoring test?
The expert assessment of the borrower's creditworthiness has already reached the proper level - it is carried out according to all international requirements and standards. It is almost impossible to bypass the check, since it is performed by an automated trained program that is ready for many variants of deception and is able to recognize it.
What should I do if the scoring score is low?
Scoring analysis plays an important role in obtaining a loan of any kind. In banking structures, first of all, the credit history is analyzed and if you need a large amount, for example, a car loan, but at the same time you had problem loans - you may not pass the check here.
Microloans can help improve the rating and pass bank scoring. Here the money is given out for a short time, on favorable terms and at the same time the history of the borrower does not play such an important role. Compliance with payment discipline in credit companies will help improve your rating and subsequently successfully pass bank checks.
