While finPOWER Connect calculates a Decision Card's Outcome based upon the rules set-up, it is up to you to ensure the scoring model is designed to adhere to your companies credit criteria.
You should carefully test outcomes BEFORE using a scoring model against live data.
Decision Cards are a device you can use to help determine whether to allow Clients to have various products, from opening the initial Client record to approving credit facilities, or even deciding whether to send a letter.
The Decision Card takes information received and provides a score that will help you make a decision by awarding points (or Passing) depending on the answers to the questions provided. The questions are designed to help you assess whether they meet certain criteria. An example of a Decision Card commonly used is the '100 point Identity Check' that is required by law in Australia before opening a bank account for a new client.
If the total score reaches a certain level, then the applicant 'passes' the credit score. If they don't score enough points you may 'fail' the application outright or refer the decision to a manager to request additional information.
Decision Cards enable you to evaluate all applicants consistently and impartially on many different characteristics. Although you may think such a system is impersonal, it can help make decisions faster, more accurately, and more impartially than individuals when it is properly designed. Many Finance Companies design their systems so that in marginal cases, applicants whose scores are not high enough to pass easily or are low enough to fail absolutely are referred to a credit manager who decides whether the company will extend a facility. This may allow for discussion and negotiation between the credit manager and the consumer.
To develop a scoring model, the Finance Company selects a random sample of its customers, or a sample of similar customers if their sample is not large enough, and analyses it statistically to identify characteristics that relate to creditworthiness.
Then, each of these factors is assigned a weight based on how strong a predictor it is of who would be a good risk. Each creditor may use its own scoring model, different scoring models for different types of loans, or a generic model developed by a scoring company.