Modeling for Change – Multiple Model Methodology
Besides vintage analysis , Our previous article mentioned that other scores can be useful in managing credit in uncertain economic times. The questions a retail bank risk analyst has to ask is, “What are the combinations that make sense? How do I make the risk score smart again? How am I going to actually make it happen?”
Bankruptcy scores have helped major banks understand their prescreen solution. By combining real income data with demographics and forecasting, Equifax has put our advanced analytical ability into one of the better income models out there. Ability to pay is being seen as a good combination with risk, and blending the scores effectively is essential to determine the value. A study in support of our Premium CPR data product indicated that having a job was a strong indicator of ability to pay. For determing the risk of offerings where the ability to pay isn’t the issue, deep dives into customer payment history can yield results in determing propensity to pay. Do customers in segment X pay mortgage or credit card first? What about phone? Dedicated analysts raise the level of the risk debate when they think beyond just the credit score, especially given it’s questionable use as a sole predictor in the current economy.
If analysts empower analytic professionals to leverage a decisioning platform capable of orchestrating multiple data products, credit risk can be managed much more efficiently. The right tools make the analytics talk by pulling multiple scores and indicators, comparing them to an adjustable scoring matrix, and delivering predictions to reality.
The resounding question from all of this is “I only have X analysts and they are focused on driving my EXISTING performance.” Turbocharge your team, then. An external group of analysts who focus on these products augments your results. They have experience with the data and with the calculations because, if you have the right team, they built the products that are now being blended. Custom decision matricies have a way of turning out better when you let your chefs shop for the grocieries. Want to talk to an Equifax Analyst about better refining your scoring in the new normal? Send us an e-mail..
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