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Monitoring your new account acquisition decisions: Overview of monitoring

June 30, 2009 by Guest Contributor

By: Kari Michel

Are you using scores to make new applicant decisions? Scoring models need to be monitored regularly to ensure a sound and successful lending program. Would you buy a car and run it for years without maintenance — and expect it to run at peak performance? Of course not. Just like oil changes or tune-ups, there are several critical components that need to be addressed regarding your scoring models on a regular basis.

Monitoring reports are essential for organizations to answer the following questions:

• Are we in compliance?
• How is our portfolio performing?
• Are we making the most effective use of your scores?

To understand how to improve your portfolio performance, you must have good monitoring reports. Typically, reports fall into one of three categories: (1) population stability, (2) decision management, (3) scorecard performance. Having the right information will allow you to monitor and validate your underwriting strategies and make any adjustments when necessary. Additionally, that information will let you know that your scorecards are still performing as expected.

In my next blog, I will discuss the population stability report in more detail.

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