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Score!T - Product Overview

The aim of Score!T is to provide a quantifiable risk assessment for a given credit application. In the process of the application scoring, information provided with the application forms is converted into models, such as scoring card and/or decision tree which come with the calculated risk classes. The risk assessment is performed by the system and each application is scored only once, although various models can be used for that purpose. The main idea behind the system is to forecast future performance from past behaviour.

Model deployment

Score!T does not individually differentiates a good application from a bad one but rather classifies applications in a particular “good/bad odds” groups of risk. If the application belongs to the “good” class, it may be considered as safe and profitable, whereas class “bad” indicates that risk is unacceptable.

The “cut-off” point separates bad from good applications. If the “cut-off” point results in a decreased profit level, it can be easily changed in accordance to the bank policy.

Bringing together the scoring card and decision tree mechanism under one roof has resulted in the origin of a truly efficient modeling system, powerful but easy to use even for users with little experience of advanced analytical tools.

Model building

Once the main characteristics from an application have been selected, a statistical model can be developed. Multivariate methods in Score!T include both statistical and data mining ones:

  • Scoring cards
  • Decision trees

Model validation

Data mining methods play a double role in the Score!T system. They can provide both: scoring models on the equal rights as the scoring cards and, in addition, they serve for validation of the scoring card models. This unique feature assures that scoring models in Score!T system are highly reliable and efficient. The same applies to the data mining models, which also can be validated this way in the Score!T system.

MBasel - the New Accord

The New Accord of Basel gives the banks with advanced risk management systems increased flexibility. In this approach more emphasis is put on bank's internal measures of risk, supervisory review and market discipline. In this context, decision support software, such as Score!T, has an important role to play. It stimulates better risk management and imposes competitive equality on credit institutions.

Score!T system may help in the New Accords “Pilar 3” implementation with respect to the following fields:

  • Internal Rating Based (IRB) approach
    • Foundation
      • Bank sets Probability of Default (PD)
      • Standard Exposure At Default (EAD)
      • Standard Loss Given Default (LGD)
    • Advanced
      • Banks sets PD, EAD & LGD
  • Better recognition of credit risk mitigation techniques
  • Behavioural scoring
    • Internal
    • External
  • Data storage