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Dynamic affordability assessment

Dynamic affordability assessment
Dynamic affordability assessment
In the credit decision making process, both applicant’s creditworthiness and affordability should be assessed. While credit scoring focuses on creditworthiness, affordability is often checked on the basis of the declared current income, the assumed standard expenditure and the existing debts which are stated in a credit report. Contrary to that static approach, a dynamic affordability assessment is proposed in this research. The affordability at a given moment in time is defined as a total amount of money the applicant can use to service their debts at that moment. It depends on the applicant’s income and expenditure which both vary in time. The suggested model can contribute to responsible lending
Bijak, Katarzyna
5130b6b9-fbf1-44e8-9106-1dd69c6692a6
Thomas, Lyn C.
a3ce3068-328b-4bce-889f-965b0b9d2362
Bijak, Katarzyna
5130b6b9-fbf1-44e8-9106-1dd69c6692a6
Thomas, Lyn C.
a3ce3068-328b-4bce-889f-965b0b9d2362

Bijak, Katarzyna and Thomas, Lyn C. (2012) Dynamic affordability assessment. 25th European Conference on Operational Research (EURO XXV), Lithuania. 08 - 11 Jul 2012.

Record type: Conference or Workshop Item (Other)

Abstract

In the credit decision making process, both applicant’s creditworthiness and affordability should be assessed. While credit scoring focuses on creditworthiness, affordability is often checked on the basis of the declared current income, the assumed standard expenditure and the existing debts which are stated in a credit report. Contrary to that static approach, a dynamic affordability assessment is proposed in this research. The affordability at a given moment in time is defined as a total amount of money the applicant can use to service their debts at that moment. It depends on the applicant’s income and expenditure which both vary in time. The suggested model can contribute to responsible lending

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More information

Published date: 2012
Venue - Dates: 25th European Conference on Operational Research (EURO XXV), Lithuania, 2012-07-08 - 2012-07-11
Organisations: Centre of Excellence for International Banking, Finance & Accounting

Identifiers

Local EPrints ID: 361326
URI: https://eprints.soton.ac.uk/id/eprint/361326
PURE UUID: 39c4e34b-9441-4785-b7e9-1565633185e5

Catalogue record

Date deposited: 23 Jan 2014 10:13
Last modified: 18 Jul 2017 03:04

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