Hi All,
Have a bit of a head scratcher on my hands. Been given an exercise in college where we have to create a system which highlights high/low risk loans based on a database given to us. The database provides information on 1000 previous loans, the details of those loans and whether or not there was a problem with repayment. I've used pivot tables to break down the data to see which were the problematic loans, and it appears like this:
Car Loans 3%
Repairs Loans 2.7%
Consolidation Loans 10.2%
Holiday loans 50%
Other Loans 3.1%
Region A 3.3%
Region B 14%
Region C 8.3%
Region D 4.4%
Paid with direct debit 0.2%
Not paid with Direct Debit 13%
The percentage beside each indicates the percentage of loans that had repayment problems.
Intuitively, I can see that the highest risk loan would be a holiday loan, from someone living in region B, choosing not to pay with direct debit. The problem I'm having is that I need the mathematics to support it! I was thinking of combining the probability of all of them, for example in this case it would be 0.5 + 0.14 + 0.13, leaving 77%, but that seems too straightforward, and I'm not confident! If anyone has the time and knowledge to help me with this It would be greatly appreciated, and if I need to provide any further info that I've left out feel free to ask.
Cheers,
Conor
Have a bit of a head scratcher on my hands. Been given an exercise in college where we have to create a system which highlights high/low risk loans based on a database given to us. The database provides information on 1000 previous loans, the details of those loans and whether or not there was a problem with repayment. I've used pivot tables to break down the data to see which were the problematic loans, and it appears like this:
Car Loans 3%
Repairs Loans 2.7%
Consolidation Loans 10.2%
Holiday loans 50%
Other Loans 3.1%
Region A 3.3%
Region B 14%
Region C 8.3%
Region D 4.4%
Paid with direct debit 0.2%
Not paid with Direct Debit 13%
The percentage beside each indicates the percentage of loans that had repayment problems.
Intuitively, I can see that the highest risk loan would be a holiday loan, from someone living in region B, choosing not to pay with direct debit. The problem I'm having is that I need the mathematics to support it! I was thinking of combining the probability of all of them, for example in this case it would be 0.5 + 0.14 + 0.13, leaving 77%, but that seems too straightforward, and I'm not confident! If anyone has the time and knowledge to help me with this It would be greatly appreciated, and if I need to provide any further info that I've left out feel free to ask.
Cheers,
Conor