A Credit Scoring Model in Banking and Finance Using Machine Learning

Swastik Rout

Volume 7, Issue 1 2023

Page: 9-14

Abstract

Personal credit has recently become one of banks' most crucial credit products. Banks and Monetary Organizations continuously attempt to find a satisfactory FICO rating appraisal model to lessen loaning risks and increment money for banks and monetary establishments. This paper applies AI to make a credit scoring model for bank applications. The work also discussed about ascertaining and setting limits for choosing an ideal FICO rating endpoint. Trial results demonstrate how our proposed strategy can be applied in banks or Credit Establishments to decrease taking a chance in advance management.

Back Download



References

  • Moorad Choudhry, Steen Blaafalk (Foreword by), “An Introduction to Banking: Principles, Strategy and Risk Management”, 2nd Edition, Wiley, May 2018.
  • VNA, “Credit growth forecast to reach 13-14 percent this year: SSI”, January 07, 2021. [Online]. Available: en.vietnamplus.vn/credit-growth-forecast-to-reach-1314-percent-this-year-ssi/194393.vnp.
  • X. Zhang, Y. Yang, and Z. Zhou, “A novel credit scoring model based on optimized random forest,” in 2018 IEEE 8th Annual Computing and Communication Workshop and Conference, CCWC, vol. 2018-January, pp. 60–65, 2018
  • C. Wang, D. Han, Q. Liu, and S. Luo, “A Deep Learning Approach for Credit Scoring of Peer-to-Peer Lending Using Attention Mechanism LSTM,” IEEE Access, vol. 7, pp. 2161–2168, 2019.
  • G. Arutjothi and C. Senthamarai, “Prediction of loan status in commercial bank using machine learning classifier,” in Proceedings of the International Conference on Intelligent Sustainable Systems (ICISS 2017), pp. 416–419, 2017.
  • Kritzinger, N., & Van Vuuren, G. W, “An optimised credit scorecard to enhance cut-off score determination”, South African Journal of Economic and Management Sciences, vol. 21, no.1, 2018.
  • Weed, D. L., “Weight of Evidence: A Review of Concept and Methods”, Risk Analysis, vol. 25, no. 6, 1545–1557, 2005.
  • Lending Club Dataset, retrieved from lendingclub.com/investing/peer-to-peer.
  • “What Is a Good Credit Score?”. [Online]. Available: experian.com/blogs/ask-experian/credit-education/scorebasics/what-is-a-good-credit-score.
  • W. J. Youden Ph.D., “Index for rating diagnostic tests”, Cancer, vol. 3 no. 1, pp. 32-35, 1950. doi: 10.1002/1097- 0142(1950)3:1<32::aid-cncr2820030106>3.0.co;2-3.

Looking for Paper Publication??

Come to us.

Submit your Paper