The accurate construction of risk tiers in your financial institution is important for the purpose of making sound credit decisions and maintaining profitability in a risk-based pricing environment.
Have you ever confirmed that your lending portfolio is performing the way the credit bureau score model you are using said it would? Are you using the correct credit bureau model for the type of loans you are doing? Validating your scorecard can be an expensive undertaking, but with Lending Insights’ LPMS it can be done quickly and cost effectively on a regular basis.
In addition to validating your scorecard, using the LPMS portfolio analytics report, you can verify that you are charging the correct rate for each of your pricing tiers by product. By knowing what your actual loss ratio is for each risk tier, you can quickly and accurately make timely changes to rates by tier to ensure profitability.
Finally, using the same report, you can project future losses in your portfolio by product and risk tier by using the past performance of the portfolio by risk tier.