Score your risk

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Scoring technology analyzes historical client data, identifies links
between client characteristics and behavior, and assumes those links
will persist to predict how clients will act. The technology can help
a microfinance institution (MFI) analyze how its clients have behaved
in the past to make more reliable loan application decisions, devise
more effective collections strategies, better target marketing
efforts, and increase client retention. For example, an MFI's credit
scoring model might find that its borrowers without business
experience have been more likely to default on loans. When the MFI's
loan officers use a credit scorecard to evaluate new applications,
prospective borrowers without business experience would be given a
lower score, making them less likely to qualify for a loan from the
institution. Scoring technology systems can be a foundation for
advanced capabilities, such as pricing loans based on individual
client risks and more accurately provisioning against loan losses.