Feeds

Credit Management meets computer automation

A necessary balancing act. A risky business

Bridging the IT gap between rising business demands and ageing tools

The date beneath

For businesses looking for the optimum approach, Equifax is one of the two main UK organisations (the other is Experian) who offer a range of support tools. First and most important is the underlying data. Since legal changes in 2002, organisations may no longer use the full electoral roll and must restrict marketing activity to individuals who have not opted out (currently around 60% of the roll). However, the entire roll is available for credit checking purposes - and it is used, in conjunction with data pooled from a large number of independent organisations in respect of individual payment history, to provide credit screening services against potential new customers.

It is important to distinguish screening services from predictive modelling. The former focus on how well individuals have dealt with credit in the past and takes the (reasonably) rational view that those who have incurred County Court Judgments or failed to pay bills on time might tend to do the same again in future.

Predictive services combine public data with other data held in-house by businesses to come up with a view as to how likely an individual is to be a future credit risk. This difference is at the root of many mass credit card mailings - and the cause of a certain amount of consumer anger. Mailshots go out explaining that an individual has been pre-screened for a particular card: All they have to do is fill out a form to accept. And when they do, their application is then rejected.

What is happening here is that the individual is a good risk on the basis of past data: But once more detailed information is provided, they do not fit the profile that the credit card operator is looking to recruit. This is also the root of a great deal of angst in face-to-face dealings: an individual turned down for credit may have little or no adverse history in their past at all. Rather, a statistical model may simply have said that whilst the overall likelihood of anyone defaulting is 0.1%, the risk relative to that individual is 0.2%. In relative terms, double the risk: In absolute terms, almost certainly a good risk.

Companies such as Equifax offer generic segmentation models, which sub-divide the UK population into groups constructed using a range of variables from the census and other sources: They also offer statistical modelling, to create the predictive scoring outlined above. A range of techniques may be used - although logistic regression and CHAID analysis are two of the most popular.

Application security programs and practises

Next page: Recession shakeup

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.