Predictive models of expenditure and over-indebtedness for assessing the affordability of new consumer credit applications Export

@article{citeulike:661608, abstract = {Lenders are under increasing pressure to consider measures of affordability and indebtedness as well as risk, when assessing consumer credit applications. In order to evaluate the affordability of a new credit product, a lender needs information about the applicant's income and outgoings. However, while most lenders obtain information about income and credit commitments many do not have much, if any, pertaining to other expenditure. Therefore, they are not well positioned to determine an individual's ability to fund new borrowing. This paper demonstrates that using only data captured on a typical application form, combined with data from a credit bureau, it is possible to develop good predictive models of expenditure and over-indebtedness that can be used in conjunction with measures of risk to reject applications from individuals who are likely to already be over-indebted, or to restrict the volume of credit advanced to that which the applicant can afford.}, author = {Finlay, S. M.}, citeulike-article-id = {661608}, citeulike-linkout-0 = {http://dx.doi.org/10.1057/palgrave.jors.2602030}, citeulike-linkout-1 = {http://www.ingentaconnect.com/content/pal/01605682/2006/00000057/00000006/art00005}, doi = {10.1057/palgrave.jors.2602030}, issn = {0160-5682}, journal = {Journal of the Operational Research Society}, keywords = {affordability, application, consumer, credit, debt, prediction}, month = {June}, number = {6}, pages = {655--669}, posted-at = {2008-08-21 17:25:14}, priority = {0}, publisher = {Palgrave Macmillan}, title = {Predictive models of expenditure and over-indebtedness for assessing the affordability of new consumer credit applications}, url = {http://dx.doi.org/10.1057/palgrave.jors.2602030}, volume = {57}, year = {2006} }

TY - JOUR ID - citeulike:661608 L3 - citeulike-article-id:661608 N2 - Lenders are under increasing pressure to consider measures of affordability and indebtedness as well as risk, when assessing consumer credit applications. In order to evaluate the affordability of a new credit product, a lender needs information about the applicant's income and outgoings. However, while most lenders obtain information about income and credit commitments many do not have much, if any, pertaining to other expenditure. Therefore, they are not well positioned to determine an individual's ability to fund new borrowing. This paper demonstrates that using only data captured on a typical application form, combined with data from a credit bureau, it is possible to develop good predictive models of expenditure and over-indebtedness that can be used in conjunction with measures of risk to reject applications from individuals who are likely to already be over-indebted, or to restrict the volume of credit advanced to that which the applicant can afford. IS - 6 JF - Journal of the Operational Research Society SN - 0160-5682 EP - 669 TI - Predictive models of expenditure and over-indebtedness for assessing the affordability of new consumer credit applications PB - Palgrave Macmillan VL - 57 SP - 655 KW - affordability KW - application KW - consumer KW - credit KW - debt KW - prediction AU - Finlay, SM PY - 2006/06// UR - http://dx.doi.org/10.1057/palgrave.jors.2602030 ER -