Learn More About Credit Scoring Fintech and Its Benefits
Learn More About Credit Scoring Fintech and Its Benefits
The government has issued regulations regarding fintech credit scoring so that the credit activities of customers in online loans can be considered as well. This rule is not without reason because previously there were no official rules regarding scoring in fintech credits causing many parties to play fraudulently.
This term is indeed familiar to most people, especially if you have already made a loan to a bank or financial institution. Now, this rule is also set in fintech institutions because the number of people who are interested in online loans is increasing lately.
What is Credit Scoring?
You could say that this is an assessment process of the profile of the prospective borrower that will be carried out by the party providing the loan. The borrowing institutions are able to find out whether the prospective customer is eligible for funding. Still, confused by the explanation? Check out the following elaboration.
Credit Scoring or credit assessment is a system that has been implemented by a financial institution or bank to assess the feasibility of the borrower who will apply for the loan. Therefore, you could say that fintech credit scoring is an assessment carried out by fintech institutions or online loans other than banks
Later on in the process, potential recipients of funds will be analyzed or checked, starting from their basic profile such as personal data, occupation, position, salary, family dependents, and many more. If the information has been obtained, it will be directly verified with several previously submitted documents.
The next process is that the lender will directly analyze the borrower's transactions such as obedience in making installment payments, how often the loan is in arrears, and whether it still has an outstanding credit.
The results of the analysis can help fintech institutions determine whether you are eligible for a loan, and the agreed upon funds and its interest.
Benefits of the existence of Credit Scoring
Even fintech or other financial institutions that have implemented this system will get several benefits from it. Given that information, you can already get data on whether they are eligible for funding or not. The following are several benefits of the existence of credit scoring.
Help Assess the Ability to Pay of Prospective Recipients
The most visible benefit is knowing the ability to pay of the prospective recipient. Thanks to credit scoring, it is possible to get a specific picture of the potential recipients of the funds.
Simplify the Credit Survey Process
It not only helps in seeing the ability of prospective customers to make payments, but it can also provide convenience in conducting credit surveys. As is known, credit surveys are one thing that should not be missed.
But usually, the process will take a lot of time. Usually, the officers will use makeshift data or use the manual method. However, by using a credit scoring system, everything will be much easier.
Helps to See the Responsibility of Customers
The last benefit is that it can help to identify the responsibilities of customers when making credit with a fintech institution. This is because through credit scoring, you can see whether the credit portfolio is healthy or not.
The existence of fintech institutions is indeed increasing lately because many people need funds quickly and easily. That is why the existence of fintech credit scoring provides a higher level of security. ***
