Comments on: The Challenge of Credit Scoring http://www.opportunity.org/blog/update-from-the-field-the-challenge-of-credit-scoring/ Opportunity International Tue, 17 Jan 2012 01:39:09 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Elizabeth Cates http://www.opportunity.org/blog/update-from-the-field-the-challenge-of-credit-scoring/#comment-76 Elizabeth Cates Wed, 13 Jan 2010 01:39:07 +0000 http://blog.opportunity.org/?p=733#comment-76 Good points on a topic that has been of concern to me for years. I would like to find a way for the little businesses compete with the big ones. This will create more competition and prevent domination of the many by the few. <br><br>One way to use existing data while developing microfinance data is to use trade receivable data by industry (ie, non-payment and timeliness of payment) as a proxy for microfinance. If there is a default, then you can rely on various risk mitigation techniques (which is effectively what happens when you have a the Trust Groups--they help guarantee repayment). <br><br>Ideally, over time, microfinance would generate its own transaction data. The information could be pooled and shared, then you would be able to (1) dynamically score since things are always changing such as patterns of repayment, and (2) no outside loans or over leveraged borrowers. <br><br>There will always be some who are mis-scored with any credit scorecard--so judgment is always a necessary component. Good points on a topic that has been of concern to me for years. I would like to find a way for the little businesses compete with the big ones. This will create more competition and prevent domination of the many by the few.

One way to use existing data while developing microfinance data is to use trade receivable data by industry (ie, non-payment and timeliness of payment) as a proxy for microfinance. If there is a default, then you can rely on various risk mitigation techniques (which is effectively what happens when you have a the Trust Groups–they help guarantee repayment).

Ideally, over time, microfinance would generate its own transaction data. The information could be pooled and shared, then you would be able to (1) dynamically score since things are always changing such as patterns of repayment, and (2) no outside loans or over leveraged borrowers.

There will always be some who are mis-scored with any credit scorecard–so judgment is always a necessary component.

]]> By: Elizabeth Cates http://www.opportunity.org/blog/update-from-the-field-the-challenge-of-credit-scoring/#comment-33 Elizabeth Cates Tue, 12 Jan 2010 17:39:07 +0000 http://blog.opportunity.org/?p=733#comment-33 Good points on a topic that has been of concern to me for years. I would like to find a way for the little businesses compete with the big ones. This will create more competition and prevent domination of the many by the few. <br><br>One way to use existing data while developing microfinance data is to use trade receivable data by industry (ie, non-payment and timeliness of payment) as a proxy for microfinance. If there is a default, then you can rely on various risk mitigation techniques (which is effectively what happens when you have a the Trust Groups--they help guarantee repayment). <br><br>Ideally, over time, microfinance would generate its own transaction data. The information could be pooled and shared, then you would be able to (1) dynamically score since things are always changing such as patterns of repayment, and (2) no outside loans or over leveraged borrowers. <br><br>There will always be some who are mis-scored with any credit scorecard--so judgment is always a necessary component. Good points on a topic that has been of concern to me for years. I would like to find a way for the little businesses compete with the big ones. This will create more competition and prevent domination of the many by the few.

One way to use existing data while developing microfinance data is to use trade receivable data by industry (ie, non-payment and timeliness of payment) as a proxy for microfinance. If there is a default, then you can rely on various risk mitigation techniques (which is effectively what happens when you have a the Trust Groups–they help guarantee repayment).

Ideally, over time, microfinance would generate its own transaction data. The information could be pooled and shared, then you would be able to (1) dynamically score since things are always changing such as patterns of repayment, and (2) no outside loans or over leveraged borrowers.

There will always be some who are mis-scored with any credit scorecard–so judgment is always a necessary component.

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