Credit information bureau TransUnion-CIBIL unveiled its new tool, CreditVision, which it says will help banks carry out better credit appraisals before taking a decision to lend money to a borrower. Harshala Chandorkar, COO of TransUnion-CIBIL, said several banks are testing the solution by doing a retro analysis before they introduce it in their credit appraisal system. She added that the banks are expected to go live in the next couple of months. A next-generation algorithm used in the tool enables banks to go through customer transactions for the past three years across a multitude of banks and financial institutions and figure out which customers are undergoing a downturn as far as finances are concerned, and who are improving. The algorithm also helps to identify which defaulters are repaying other lenders and are therefore worthwhile pursuing. Explaining the salient aspects of the tool, Chandorkar said while lenders have been relying on analytics to provide automated loans, they had only the customer’s history to fall back on. They can now use the software to provide automated loans to even non-customers. Until now, when a bank received an application for a loan or credit card, they would use the individual’s credit score for taking a decision. Individuals with a credit score of above 750 are considered as good credit risks. However, the score is a static piece of information. What the software does is provide additional variables to financial institutions to come up with more precise decisions. It looks at patterns of payments, exposures, and trends at how a customer is making payments, said Chandorkar. She also mentioned that using the tool means banks can lend an additional Rs 69,000 crore to more than 15 lakh borrowers. This is based on an analysis of existing loan applicants who have been prompt in repayment or even prepaying their loans.
