By: Kari Michel
In my last blog I gave an overview of monitoring reports for new account acquisition decisions listing three main categories that reports typically fall into: (1) population stability; (2) decision management; (3) scorecard performance.
Today, I want to focus on population stability. Applicant pools may change over time as a result of new marketing strategies, changes in product mix, pricing updates, competition, economic changes or a combination of these. Population stability reports identify acquisition trends and the degree to which the applicant pool has shifted over time, including the scorecard components driving the shift in custom credit scoring models.
Population stability reports include:
• Actual versus expected score distribution
• Actual versus expected scorecard characteristics distributions (available with custom models)
• Mean applicant scores
• Volumes, approval and booking rates
These types of reports provide information to help monitor trends over time, rather than spikes from month to month. Understanding the trends allows one to be proactive in determining if the shifts warrant changes to lending policies or cut-off scores.
Population stability is only one area that needs to be monitored; in my next blog I will discuss decision management reports.
