It is hardly surprising that banking companies use a variety of methods to assess the credibility of any borrower. Credit scoring is one of them. It is worth remembering. How do banks use credit scoring ? What characterizes this method? What are the different types of this method of assessing a potential borrower? If you are interested in this topic, then it is worth reading today’s post devoted to this issue.
Assessment of the borrower’s credibility
It should be noted that there is no shortage of people who apply for loans. They want to buy an apartment, house, car or renovate the kitchen, etc. There are really many possible scenarios. The mere submission of an application does not mean, however, its certain acceptance. You have to show your good side and meet various requirements. Banks use credit scoring because they know that it is a good method to assess a potential borrower. It should be emphasized that points are awarded to each person.
The more mesh you have, the greater the chance of getting your dream loan. This must not be forgotten. It should be noted that one of the most important aspects of this method is the characteristics of a particular borrower. The profile is compared with people who already have a loan in a specific bank and systematically pay their liabilities. If people who analyze the applications notice various similarities between the client and current borrowers, then there is a high probability of obtaining a loan.
How banks use credit scoring
It is impossible not to mention that we are dealing with different types of credit scoring. One of them is behavioral scoring. It should be emphasized that here a potential borrower is analyzed in terms of his previous service of previously drawn financial products. How does all this look in practice? It cannot be ignored that people who had previously taken loans but regularly repaid them are very well perceived by banks.
The situation is definitely worse in the case of people who had problems with regular settlement of their obligations. No wonder that people from the latter group are much less likely to get the dream loan in a given company.
You can’t forget about application scoring
Points are awarded here based on the details entered by the borrower in a special card. What are the messages about? We are talking about income, age, marital status, financial obligations, the period of employment with the current employer, telephones, insurance, cars, bills, etc.