Perhaps today no one has ever used a loan at least once in his life. Bank employees can sometimes decide on a loan within 15-20 minutes after applying.
How can they do that, how much short time for the debtor’s appraisal? They do not do it themselves – the decision is made by an impartial computer program – a scoring system. It is the customer who evaluates the level of customer reliability based on the entered data.
What a special word
This name is not very clear from the English word score, which means “score”. Scoring is a computer program, which is a kind of questionnaire that characterizes a borrower.
Before deciding to grant a loan, a bank employee will ask you to answer some questions and enter answers on a computer, after which the program evaluates the results and assigns a certain number of points to each subject.
As a result of adding all ratings, we get a general indicator, defined as a score. The higher this score is, the more likely it is to make a positive lending decision. Most often, more than one type of scoring is used at a time, evaluating a client in different directions, or using a complex multi-level system.
Types of evaluation
The most important and the most frequent of them are Application Evaluation This is an evaluation of the customer’s solvency validation method. If you have not earned enough points for this type of assessment, it will be very difficult to get a loan. Alternatively, you may be offered other loan terms – a higher interest rate or a lower loan amount.
The next stage of the assessment is to determine the potential borrower’s tendency to fraud. The system will evaluate this. Scoring scams. The criteria used to calculate this parameter are the business secrets of each bank.
Behavioral scoring This is a type of control that allows us to predict the client’s solvency in the future. This analytical system also allows you to identify some “behavioral” factors: how the client will handle the loan, whether he/she makes payments accurately and on time, immediately choose a credit card limit or use the money in parts and much more.
There’s one more, the most annoying kind of control, – The evaluation collection borrower, which is very important to develop measures to address arrears with clients. It is necessary for an adequate assessment of the risk of credit default and the timely application of preventive measures.
Is it possible to “cheat”?
Given that the credit rating is done by the machine, it may not seem difficult to cheat the system – all that is needed is to give ‘correct’ answers from the bank’s point of view. This is not the case, however, such an attempt can only succeed in those cases where the program is built so that it will not work immediately when you verify some information about you.
If scoring only requires documented information, it is almost impossible to fool the system. Check that the data in the questionnaire matches the actual data For security officials this will not be difficult, as in the vast majority they are former employees of the Ministry of the Interior, And other similar departments and are willing to use ‘old connections’. In addition, sometimes it is enough to call the work or the neighbors of the future client.
So trying to trick the program is still not worth it, because it originally contains all known systems and signs of fraud, and if such an attempt is detected, a loan at this bank will never be granted to you.
So let’s consider what benefits a potential borrower should have if he wants to borrow a loan without any problems.
Personal information – who’s lucky
- Sex – It is assumed that women are more responsible for meeting their financial obligations.
- Age – here, excessive youth or maturity can play a trick on you. The age range is 25-45 years. Customers who fall within this range may count on extra points for this item.
- Education: – if you have a university degree, the bank trusts you more. These clients are considered more successful, responsible and financially stable.
- Family ties – Lonely people are not a priority, so if you can boast at least a legal marriage, get another point.
- Dependent – Of course, having children will not be an obstacle in getting a loan, the more they are, the lower the score for that item.
Finance – which professions are preferred
In this section of the questionnaire, the program will evaluate your progress in the field of work – in general, and seniority, the prestige of the profession, recent wages, the availability of additional income sources and more. The ideal option, in this case, is the presence of only one entry in the workbook – the more often you change your place of work, the less you stay in each business, the less points the system will earn.
Strangely, banks do not like company directors, financial managers, and citizens who provide their own jobs (notaries, lawyers, private detectives, individual entrepreneurs, etc.) because their income is not fixed but depends on market trends. Preference is given to self-employed clients – civil servants, professionals, workers, and middle managers – their income is considered more stable.