Many banks and financial lenders go through a series of stages to evaluate an individual’s propensity to pay back a loan before disbursement. One of them is assessing an individual’s credit score and usually by an indication via their credit score. A credit score is a 3-digit number that shows how ‘good’ or ‘bad’ a person’s credit health is. Credit scores also act as a benchmark for banks and financial lenders to evaluate potential defaulters and whether credit product applications will be approved.
Having a good credit score means having better financing opportunities and banks being more prone to approving applications, in addition to being offered better rates for different credit products such as home loans, car loans, and personal loans. Read iMoney’s in-depth article on ‘Everything you need to know about your credit score’ to learn more about credit scores.
What is a credit scoring engine?
In the process of identifying or reducing potential defaulters, banks and financial lenders need to use efficient tools and software to best assess the creditworthiness of their customers. Using a credit scoring engine helps determine and identify people who carry a risk of being potential defaulters. Additionally, the credit scoring engine is set as one of the key elements in the entire lending system in the process of granting loans.
Integrating a credit scoring engine into a lending system also comes with its advantages which include:
- A shortened time for risk assessment processes and a higher calculation efficiency
- Streamlining credit processes with little human resources needed
- Automating credit assessment process to reduce the risks of human error
- Minimising risk of wrong decision-making on granting loans under unfavourable conditions
- Having a comprehensive credit policy management to store and monitor all data in one place.
How does JurisTech’s credit scoring engine compare?
As a solution provider and credit management expert to many major banks and financial institutions, JurisTech has its very own scoring engine, Juris Score. Juris Score is a complete financial scoring software solution that can assess the customer’s creditworthiness and provide recommendations based on results. Juris Score can be integrated with many of our software solutions such as Juris Origination, an end-to-end loan origination system, and Juris Access, a digital onboarding platform, to help businesses streamline their entire customer journey. Juris Score uses expert rules allowing credit managers in the financial institution to evaluate a customer’s creditworthiness using a graphical rule builder engine in the system. Scores computed can be mapped to grade/rating and used to recommend credit eligibility and approval decision. integrated with a self-built scoring engine,
Systematic and Comprehensive Scoring Methodology
Juris Score uses a systematic approach to provide both quantitative and qualitative measurements of the likelihood that a customer will default or postpone repayment. Quantitative scorecards establish the customer’s performance in terms of quantitative parameters such as monthly net income, Debt Service Ratio (DSR) analysis, age, length of employment and gender. Qualitative scorecards on the other hand take into account qualitative parameters if applicable such as employer’s feedback, employment experience and relevant employment details.
Rule Builder Engine
Juris Score is supported by an advanced engine named ‘Rule Builder’ which gives users the flexibility of creating their own decision framework from users’ experience or financial institution’s policy. It consists of 4 components,
- Scoreset – Grouping of Scorecard category, which can be based on products, line of business, customer category e.g. personal finance, hire purchase, home mortgage.
- Scorecard – Multi-tier Scorecard which consists of different criteria of rules.
- Rule Profile – Weightage / non-weightage rule criteria which consist of different rules.
- Rule – Conditions of rules where variables are selected from the data input and scores will be assigned based on the degree of risk associated.
Simplifying User Experience
Juris Score provides a highly flexible yet user-friendly experience, using the ‘Rule Builder’, for users to build the financial institution’s defined expert rules scorecard in a graphical user interface. Users can set up a rule without the need for programming knowledge. All the configured conditions will then be translated into a single SQL query and populated on the screen. With Juris Score, financial institutions are no longer required to leverage “black-box” scoring tools and have better control over the overall credit assessment policy.
Juris Score’s interface simplifies the setup effort which used to be complicated. Users can configure with clearer direction in less time. An all-in-one setup screen allows users to perform different types of configurations within a place, such as creating formulas, mapping of field names, and decision recommendations.
Juris Score’s Advantages
The key to making the right decision intelligently is to understand the customers. Juris Score helps financial institutions to assess the customers’ credit standings and provide recommendations. The values that Juris Score brings to the financial institution are abundant:
- Fully web-based for easy deployment and lower maintenance
- Multi-tier scoring approach
- Supports weightage or non-weightage scoring
- Ability to accommodate multiple layers of scorecards
- Flexibility to build expert rules scorecard defined by the financial institution
- Easy to configure scorecard without programming effort
- Help credit managers to balance risk against profit pursuit, increasing operational efficiencies
Juris Score makes it possible for financial institutions to make smarter decisions in translating customer profiles, assessing overall risks, and significantly reducing the chances of approaching potential defaulters.
Interested to learn more about Juris Score, contact our sales team today and request a free demo via firstname.lastname@example.org
JurisTech (Juris Technologies) is a leading Malaysian-based fintech company, specialising in enterprise-class software solutions for banks, financial institutions, and telecommunications companies in Malaysia, Southeast Asia, and beyond.