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 […]

Leave a reply

Other recent posts

Qlik finally set to leapfrog Tableau?

Who’s your rival? I carelessly asked a Qlik person at the company’s annual analyst reception Monday night in Miami if she hadn’t once worked for Tableau. Her revulsion was immediate. “No! Never!,” she said. We smiled. There was so much more to talk about. For one thing, how will private equity change things? Qlik wasn’t… Continue Reading

Five Tips for Better Data Stories

Originally published on September 22, 2015 in BI This Week, a TDWI publication. A “data story” sounds like such a great idea. You just mix data with storytelling and you’re done — except that most data storytellers get one thing wrong: they drown out the story with data. Such storytellers, I believe, assume that audiences… Continue Reading

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