Feeds

Credit Management meets computer automation

A necessary balancing act. A risky business

Security for virtualized datacentres

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.

Security for virtualized datacentres

Next page: Recession shakeup

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.