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Credit Risk
Background of the study and
Dataset
To predict the credit default Rate
Accurate prediction of whether an individual will repay the credit or will it be
written off
Analytics Objectives
To run a logistic regression to linearize the dependent category to the extent possible
MLR to determine which independent variable plays a significant role in determining
the repay ability of the customers.
Description of the Data. (Variable name &
Variable definition)
Variable Name Data Type Data Description
Loan ID Nominal Transaction number
Customer ID Nominal Customer Transaction Number
Current Loan Amount Ratio Current outstanding Debt
Term Interval Tenure of Credit
Credit Score Ranking Ability of customer to repay scored by external rating agency
Annual Income Ratio Annual Income of Customer
Years in current job Interval Customer tenure in current job
Maximum Open Credit Ratio Credit a financial institution can extend on an already existing line of credit
1
2000
Cumulative
Sensitivity
0 0
0 0.5 1 1.5 0 2000 4000 6000 8000 10000
1 - Specificity # Cases
Confusion Matrix
Confusion Matrix
Predicted Class
Actual Class 1 0
1 3842 1155
0 342 4658
Error Report
Class # Cases # Errors % Error
1 4997 1155 23.11386832
0 5000 342 6.84
Overall 9997 1497 14.97449235
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