Assessing credit risk

Abstract

There is provided a computer-implemented method of assessing credit risk, the method comprising the steps of: obtaining non-sufficient funds declines data on past transactions of a plurality of account holders occurring during an outcome window; obtaining transactional data on the past transactions of said plurality of account holders occurring during an observation window that precedes the outcome window; deriving one or more rules based on the occurrence of non-sufficient funds declines during the outcome window and on the preceding transactional data from the observation window; and applying the one or more rules to transactional data on past transactions of an individual account holder occurring during an individual observation window for that individual in order to determine the likelihood of a non-sufficient funds decline occurring during a subsequent individual outcome window for that individual. There is also provided a computer readable medium comprising a set of program instructions. There is further provided a system for assessing credit risk.

Description

[0001] Cross References to Related Applications [0002] This application claims priority and benefit from the filing date of European Patent Application No. 15183026.2, filed 28 August 2015, the entire contents of which are hereby incorporated by reference. technical field [0003] The present invention generally relates to methods of assessing credit risk. More specifically, but not exclusively, to a method of assessing risk based on insufficient funds denials associated with individual account holders. Background technique [0004] The problem of financial borrowers failing to make required payments to their issuers or lenders persists. For example, some borrowers may exhibit a lack of financial discipline and be more prone to losing mortgage payments or credit card payments, and are therefore bad debtors. Other borrowers may show a tendency to make payments early or on time, and thus are correspondingly good debtors. [0005] Borrowers with high credit risk often expr...

AI Technical Summary

Problems solved by technology

[0008] However, when issuers are faced with assessing prospective account holders with little or no credit transaction history: so-called "thin-file" customers with little or no credit when the issuer has limited information about its customers (for example, because the issuer has a small customer base, little or no experience with lending products, or is so conservative that it never observes significant levels or repayment problems), then the issuer or Lenders may find it difficult to generate scores that are meaningful enough to help them make credit decisions

Images