PRACTICAL USING OF SCORING CARDS’ DEVELOPMENT METHODOLOGY FOR AUTMOBILE LOANS RISKS ANALYSIS

Abstract

This article is devoted to scoring cards development. The main stages and roles during the
building of scoring cards are discussed. The process flow for scorecard development includes such stages as
data processing and priory analysis of characteristics, development of priory scorecard, rejected inference,
deep analysis of characteristics, final scorecard development and validation. On example of automobile
loans it is shown how to implement scoring cards to existing scoring process in banks. Also it is demonstrated how to include rejected applications in credit scoring process and also the importance of such action for
increasing preciseness of decision making The process of using rejected applications is called reject inference and could be implemented only after building of a credit scorecard for approved applications. After
building of scorecard the rejected applications are included in ration which is accepted in bank for such type
of credits. After this the most important variables (characteristics) and their predictive strengths could be
defined. New scoring card as a final scoring card is built on accepted and rejected credit applications. Validation of the credit cards and choosing the best one is the final stage of the process of development scoring
card. After this the chosen scoring card is implemented in bank but still monitoring and controlling are provided. During implementation of the credit scorecard the best cut-off is also detected but it could be modified
after implementation of the scoring card.