Using a transactor/revolver scorecard to make credit and pricing decisions
Using a transactor/revolver scorecard to make credit and pricing decisions
In consumer lending the traditional approach is to develop a credit scorecard which ranks borrowers according to their risk of defaulting. Bads have a high risk of default and Goods have a low risk. To maximise the profitability of credit card customers, a second classification between revolvers and transactors becomes important. Building a transactor/revolver scorecard together with a Good/Bad scorecard over the revolvers, gives rise to a risk decision system whose ranking of risk is comparable with the standard approach. The paper develops a profitability model of card users including the transactor/revolver score leads. This gives more accurate profitability estimates than models which ignore the transactor/revolver split.
143-151
So, M.C.
c6922ccf-547b-485e-8b74-a9271e6225a2
Thomas, L.C.
a3ce3068-328b-4bce-889f-965b0b9d2362
Seow, H-V
37aba610-227e-49c7-ab72-3e9908b8aaf3
Mues, C.
07438e46-bad6-48ba-8f56-f945bc2ff934
March 2014
So, M.C.
c6922ccf-547b-485e-8b74-a9271e6225a2
Thomas, L.C.
a3ce3068-328b-4bce-889f-965b0b9d2362
Seow, H-V
37aba610-227e-49c7-ab72-3e9908b8aaf3
Mues, C.
07438e46-bad6-48ba-8f56-f945bc2ff934
So, M.C., Thomas, L.C., Seow, H-V and Mues, C.
(2014)
Using a transactor/revolver scorecard to make credit and pricing decisions.
Decision Support Systems, 59, .
(doi:10.1016/j.dss.2013.11.002).
Abstract
In consumer lending the traditional approach is to develop a credit scorecard which ranks borrowers according to their risk of defaulting. Bads have a high risk of default and Goods have a low risk. To maximise the profitability of credit card customers, a second classification between revolvers and transactors becomes important. Building a transactor/revolver scorecard together with a Good/Bad scorecard over the revolvers, gives rise to a risk decision system whose ranking of risk is comparable with the standard approach. The paper develops a profitability model of card users including the transactor/revolver score leads. This gives more accurate profitability estimates than models which ignore the transactor/revolver split.
Text
revolvertransactorsecondrevisionsent.pdf
- Accepted Manuscript
More information
Accepted/In Press date: 8 November 2013
e-pub ahead of print date: 16 November 2013
Published date: March 2014
Organisations:
Southampton Business School
Identifiers
Local EPrints ID: 359696
URI: http://eprints.soton.ac.uk/id/eprint/359696
ISSN: 0167-9236
PURE UUID: fa808ac1-f78f-4de3-99ff-6d8cc60d235e
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Date deposited: 08 Nov 2013 14:15
Last modified: 15 Mar 2024 03:29
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Author:
L.C. Thomas
Author:
H-V Seow
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