Credit risk kaggle

How is credit risk determined?
The basis for an effective credit risk management process is the identification and analysis of existing and potential risks inherent in any product or activity.
Consequently, it is important that banks identify all credit risk inherent in the products they offer and the activities in which they engage..
What are the 5 credit risks?
What Is Credit Risk? Credit risk is the probability of a financial loss resulting from a borrower's failure to repay a loan.
Essentially, credit risk refers to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flows and increased costs for collection..
What are the methods of credit risk?
Credit risk can be partially mitigated through credit structuring techniques.
Elements of credit structure include the amortization period, the use of (and the quality of) collateral security, LTVs (loan-to-value), and loan covenants, among others..
What is meant by credit risk?
One of the modest ways to calculate credit risk loss is to compute expected loss which is calculated as the product of the Probability of default(PD), exposure at default(EAD), and loss given default(LGD) minus one..
This broad-based risk score predicts how likely a consumer is to repay a loan and make payments when they are due.
Another way to look at it, a risk score provides an indicator of the likelihood that a consumer will become more than 90 days delinquent in the next 24 months.

Credit risk is the possibility of losing a lender takes on due to the possibility of a borrower not paying back a loan. Consumer credit risk can be measured by the five Cs: credit history, capacity to repay, capital, the loan's conditions, and associated collateral.

Building Model

Logistic Regression

Conclusion

We have built the credit risk model by using python. we have tried with different machine learning algorithms ie.
Logistic regression, Random Forest, and Xgboost classifier. we have also done hyperparameter tuning and cross-validation.
The final accuracy of the model we achieved was 82%.

Does Kaggle support consumer loans issued by a US P2P lender?

We will use a dataset made available on Kaggle that relates to consumer loans issued by the Lending Club, a US P2P lender.

What is a credit risk model?

Credit risk models are used by financial organizations to assess the credit risk of potential borrowers.
For companies involved in the financial system, preserving the financial health of clients is critical.
However, you could be wondering how to protect each client’s financial well-being.

What is C redIT risk?

C redit risk is the possibility that a borrower will not be able to make timely payments and will default on their debt.
It refers to the possibility that a lender may not get the interest or principal due to them on time.
Financial organizations are concerned about reducing the risk of default.

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This Notebook has been released under the Apache 2.0 open source license.

Credit risk kaggle

How is credit risk determined?

What are the 5 credit risks?

What are the methods of credit risk?