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Banks are introducing a new point credit scoring system

16 June 2009 / 17:06:53  GRReporter
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After July 1st Tiresias JSC will apply a new credit scoring system, according to which a profile for each client will be created. The goal of the banks is to calculate personal interest rates based on points gathered by each client. The lowest interest rate will be paid by the “good” clients and bigger one – by those who have delayed a credit payment or the ones who have too many credits.

The service credit scoring has been in a pilot stage for few weeks. It analyses data, which is part of the white and black list of the Tiresias system and then evaluates each client on a scale up to 1000. After July 1st everyone who wants credit, will be scanned by the credit agencies and entered in the evaluation system, which will show whether the client has high or low result. Based on the result, the bank will decide whether to give credit or not.

The Bank of Greece is ready to use the system, because based on primary data ?18 billion in form of credit are floating in the air unpaid. This is the reason why the credit associations have asked Tiresias JSC to develop the upper mentioned credit scoring system, based on programs widely used in the US and Europe. Based on the data of each client present in the system, on the archives and by using a specific statistical model, which is renewed and adapted each year, Tiresias reached to two percentage data: a percentage, which shows the possibility of a credit holder not paying the credit association and another percentage, which shows the possibilities for the client to take credit. For example, if someone gathers 550 points, the possibility of not paying back the credit is 5.2%.

Even thought the system will aim to limit the risk of nonpayment, there will be cases where a client can be present in the Tiresias black list for disloyal financial behavior but a credit can be given to him. This will happen, because the final decision of whether to give credit or not is taken by the bank itself.

In the future, based on this evaluation banks will be able to apply personal calculation of the interest rate and to award “good” clients. For example, if one has high income, pays his monthly fees, which are no more than 40% of his income and never been paid late, will be able to get a house credit with Euribor interest rate and a possibility of 2% increase. In other words, if he takes a ?200 000 credit with a payoff period of 20 years, then the monthly fee will be ?1,147. If the candidate does not have enough points but is not in the black list, than he will be able to take out a house credit with Euribor interest rate and possibility of increase with 4%, this way the monthly fee becomes ?1,362.

Due to the bad evaluation, the second client will have to pay ?215 more per month, which equals to ?2,580 per year.

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