SAS finance architect is out to overhaul credit-scoring metrics

Some loan officers used to go by rules of thumb. There were “The Three B’s: never lend to beauticians, bartenders or barbers” and “The Three P’s: never lend to preachers, plumbers or prostitutes.” Now we have an automated system, but it can’t tell an upstanding banker from a down-on-his-luck bartender.

Imagine a high-level banker who leaves his job for a promotion in another state. He’s trusted and respected for the job he did as senior risk manager, reporting to the board of directors, at a 19-branch bank in Atlanta. But for moving and taking that new job, his credit score declines. He’s forced to pay more for his new mortgage.

“That makes no sense,” he says, “It’s completely out of context,” says Clark Abrahams, SAS’s chief financial architect. He’s happily resettled, but he’s out to overhaul the U.S. credit scoring system.

The context the system missed is his ample capacity to repay the loan. He’s automatically put in the same basket as some other applicant who may live paycheck-to-paycheck.

Context is just what he would inject into the U.S. credit-scoring system. He calls the new system he’s promoting model CCAF (SEE-caff), for Comprehensive Credit Assessment Framework.

Today’s distorted scoring began decades ago, he explains. Before we had credit scoring, we had loan officers. They approved or denied loans based on their own experience and judgment. But that was unreliable and often unfair.

So when computers became available, banks developed scoring. Now we’ve swung the other way: proxy metrics, not common sense, rate credit applicants.

It’s a story in progress for TDWI’s BI This Week.

Filed Under: Uncategorized

One Response to SAS finance architect is out to overhaul credit-scoring metrics

  1. […] (SAS finance architect is out to overhaul credit-scoring metrics) ประเด็นสำคัญในเรื่องนี้ก็คือ […]

The data industry thrives on conversation. Please submit a comment.

Other recent posts

Bohemian Grove a la BI

The Bohemian Grove of the BI industry convenes for the fifteenth time in just three weeks. Naturally, you ask the obvious question: Are you serious? The Grove? A summit? The answer begins with a fond recollection of the Grove. If you’ve never attended the Bohemian Grove yourself — I haven’t, though I live in the… Continue Reading

Favorite Star Trek, a data story

This story shows how elemental data stories really are. Humans come ready to tell and hear them, requiring no plug-ins at all. This young person can do a good job of it. There was a question, followed by data, then questions and answers, and and finally a conclusion. It’s all there. It’s elementary. Sure, this… Continue Reading

Bad stories stop good data at the water cooler

We agree by now that data’s a good compass. One neglected question is tougher: Which map? Everyone’s known the kind of “grouchy guy” TDWI instructor Kellee M. Franklin, Ph.D tells about. This guy knew better than most of his co-workers about how their Washington, D.C. defense agency worked. And he was frustrated. Over the years,… Continue Reading