Mengenal Penilaian Kredit dan Fungsinya bagi Multifinance
Credit scoring is a system which is usually used by companies or bank to determine the suitability of a client to receive a loan. Data such as personal information and credit payment history are taken during the loan application process.
Then, why is the implementation of credit scoring considered as important and required by a multifinance company? Following, you can learn further information regarding functions, benefits, and implementation of credit scoring which can be used for your company’s business operation.
Credit scoring as a solution to the loan risk
Credit scoring is used as a system to evaluate risks of loan and credits in order to keep it in the safe limit. Through phases of character analysis, credit portfolio, credibility of the borrower, and others, credit scoring hastes multifinance business operational and improve accuracy of the data.
Regardless of the requirements set by creditors or banks, implementation of credit scoring can minimize loan rick efficiently. The higher one’s credit score, the smaller is the loan risk to be borne.
Implementation of the loan risk
How to calculate the credit scoring? Reported by the BI checking, there are 5 scores which can be used as a reference in evaluating the credit score. Naturally, these references can be adjusted automatically with the necessity and the company’s condition.
Score 1: The credit is current. The borrower is always on time in credit or instalment payments with its interest. They do not show delinquency, and always pay the full amount.
Score 2: The credit is under special attention (DPK). The borrower is late in credit or instalment payments for 1-90 days
Score 3: The credit is non-current. The borrower has not paid their credits or instalments for 91-120 days
Score 4: The credit is in doubt. The borrower has not paid their credits or instalments for 121-180 days
Score 5: Bad credit. The borrower fails to pay their credits or instalments for more than 180 days
Certain companies or banks are entitled to use their own standard, the borrowers have to acquire a certain amount of score in order to have their credit application approved. Other than the five scores explained above, there are other additional criteria which influence the credit scoring process. Each has different weight, depends on the company or bank who apply it. The additional criteria are:
- Business field or working place
- Job title
- Duration of work
- Net income
- Marital status
- Banking track record
- Number of dependents
- Job of the partner (if applicable)
- Other additional income
- Active credit
Potential client is considered to have a good credit score if it is more than 720. In the other hand, those with scores below 640 will face difficulties in applying for a loan to a company or bank.
Benefit of credit scoring
The main benefit of credit scoring is the higher ability of the borrower to pay. Implementing the credit scoring system means knowing the borrowers credit history, such as whether they have been punctual in their credit payment or the number of credit cards owned. Other than that, there is a more personal approach to understand the borrower’s character, starting from their shopping habit to their psychological condition.
Credit scoring is also useful during analysis and evaluation of the credit application to simplify it. If you have been taking a long time to complete the analysis and evaluation phases, integrated credit scoring which is filled by the borrower can ease your company in determining the interest rate, loan tenure, and credit risk.
Data compiled during the company’s implementation of credit scoring system will also be useful and save time in business operational process. Then, the operational cost can be reduced. Furthermore, the company can build a partnership with banks who have similar needs in order to decrease the operational cost while increasing the quality of the service.
Core system with a trusted credit scoring
A company can last and excel in the change of time while committing to prioritize company’s governance, risk management, and compliance with regulations (GRC). For multifinance companies, one of the methods is by using a trusted and integrated core system.
You can use CONFINS. CONFINS is a core systems for multifinance which is completed with a sophisticated computing system and practical modules which are used by various financial business line. One of the modules offered is the credit scoring module which covers score card, score setting, and score history. Other than that, CONFINS is cloud based which means that it has a high performance and is safe to use. Trust your business operational with CONFINS.