2. Credit Scoring System
• IPA is partnering with three rural banks in the
Philippines to develop and test credit scoring systems
• Credit scoring models tailored to each bank,
developed using historical lending/borrowing data
• Designed to objec.vely predict a client’s likelihood of
repayment based on items such as:
– Cash flow
– Debt capacity
– Past repayment pa=erns of similar loan clients
4. Benefits of Credit Scoring System
• To clients:
– Receive immediate approve/deny decision
– Loan decision based on objec.ve informa.on
• To banks:
– Poten.al for improved quality of clients
– Real‐.me loan and term decisions
– Portability of netbooks
– Greater accuracy of data
– “Impressiveness” factor
– Extensive data on microfinance clients
5. Electronic Applica.ons
• Poten.al first step in building credit scoring model
– Credit scoring modeling may involve external assistance/
analysis/exper.se
– But, the plaZorm on which it is built is dependent on high‐
quality, readily accessible borrower data
• Even if not moving toward credit scoring, carries
many of the same benefits
6. Benefits of Electronic Applica.ons
• To clients:
– Receive immediate approve/deny decision
– Loan decision based on objec.ve informa.on
• To banks:
– Poten.al for improved quality of clients
– Real‐.me loan and term decisions
– Portability of netbooks
– Greater accuracy of data
– “Impressiveness” factor
– Extensive data on microfinance clients
