Equifax India, registered as Equifax Credit Information Services Private Limited (ECIS), has announced the launch of Graduation Score, a first of its kind in the industry. The Graduation score assesses risk of customers who were primarily used to borrowing as part of a group to “graduate” to taking loans as individuals. This score has been built based on performance of group loan customers from the credit bureau data. This score will also enable digitization of the individual lending to group loan process within lenders. The Graduation Score from Equifax enables primarily group loan customers to accelerate to individual loans retail loans therefore becoming eligible for loans of higher amounts and longer tenures.
Graduation Score is a bureau credit score developed by Equifax to enable financial institutions to lend individual loans to customers who have primarily had group loans in the past. The concept of group loans was originally developed to have new-to-credit customers take loans with low EMIs to be paid as a groups and then graduate to individual loans with higher sanctioned amounts and EMIs and a lower probability of default.
“Financial institutions rely on manual assessment of loan applications which require high costs and time for evaluation,” said K M Nanaiah, Country Head, Equifax India. “Using Graduation Score from Equifax, they can approve these loans digitally on the basis of the customer’s probability of default on individual loans and therefore improve risk assessment of the product. The current customer view from Graduation Score and combined CIR supports consistent credit decisions, strong revenue generation and profitability throughout the customer lifecycle.”
As the group loan customers are readying themselves for repayment of higher value loans as individuals, Graduation score will provide the much needed impetus in risk assessment. Currently, financial institutions rely largely on manual assessment of loan applications and bureau data of group, individual and retail loans for evaluation, which ends up being costly and inefficient. Graduation Score enables them to evaluate individual loans for customers that have not had individual loans in the past and increase the amount of individual lending while they drive good quality of credit too.