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Monitoring your new account acquisition decisions: population stability

Published: July 30, 2009 by Guest Contributor

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.

Related Posts

Once a scorecard has been redeveloped, it is important to measure the impact of changes within the strategy by replacing the old model with the new one. This impact assessment can be completed with a swap set analysis.

Published: January 19, 2018 by Guest Contributor

By: Kari Michel This blog is a continuation of my previous discussion about monitoring your new account acquisition decisions with a focus on decision management. Decision management reports provide the insight to make more targeted decisions that are sound and profitable. These reports are used to identify: which lending decisions are consistent with scorecard recommendations; the effectiveness of overrides; and/or whether cutoffs should be adjusted. Decision management reports include: • Accept versus decline score distributions • Override rates • Override reason report • Override by loan officer • Decision by loan officer Successful lending organizations review this type of information regularly to make better lending policy decisions.  Proactive monitoring provides feedback on existing strategies and helps evaluate if you are making the most effective use of your score(s). It helps to identify areas of opportunity to improve portfolio profitability. In my next blog, I will discuss the last set of monitoring reports, scorecard performance.  

Published: August 6, 2009 by Guest Contributor