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    Credit Card Approval Prediction Using Machine Learning

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    Hemant
    This document discusses using machine learning to predict credit card approvals. It aims to build a predictive model that evaluates an applicant's creditworthiness based on characteristics and history to help banks make more accurate lending decisions. Traditional credit scoring models only use limited data, while machine learning approaches can utilize a wider range of features to adapt to changing behavior. Key aspects of the research include feature selection, handling unbalanced data, using interpretable models, and meeting regulatory requirements for transparency and fairness in credit decisions. The performance of these predictive models is measured using common metrics like accuracy and AUC-ROC.

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    Credit Card Approval Prediction Using Machine Learning

    Uploaded by

    Hemant
    92 views2 pages
    This document discusses using machine learning to predict credit card approvals. It aims to build a predictive model that evaluates an applicant's creditworthiness based on characteristics and history to help banks make more accurate lending decisions. Traditional credit scoring models only use limited data, while machine learning approaches can utilize a wider range of features to adapt to changing behavior. Key aspects of the research include feature selection, handling unbalanced data, using interpretable models, and meeting regulatory requirements for transparency and fairness in credit decisions. The performance of these predictive models is measured using common metrics like accuracy and AUC-ROC.

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    Credit card approval prediction using Machine learning

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    This document discusses using machine learning to predict credit card approvals. It aims to build a predictive model that evaluates an applicant's creditworthiness based on characteristics and history to help banks make more accurate lending decisions. Traditional credit scoring models only use limited data, while machine learning approaches can utilize a wider range of features to adapt to changing behavior. Key aspects of the research include feature selection, handling unbalanced data, using interpretable models, and meeting regulatory requirements for transparency and fairness in credit decisions. The performance of these predictive models is measured using common metrics like accuracy and AUC-ROC.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    92 views2 pages

    Credit Card Approval Prediction Using Machine Learning

    Uploaded by

    Hemant
    This document discusses using machine learning to predict credit card approvals. It aims to build a predictive model that evaluates an applicant's creditworthiness based on characteristics and history to help banks make more accurate lending decisions. Traditional credit scoring models only use limited data, while machine learning approaches can utilize a wider range of features to adapt to changing behavior. Key aspects of the research include feature selection, handling unbalanced data, using interpretable models, and meeting regulatory requirements for transparency and fairness in credit decisions. The performance of these predictive models is measured using common metrics like accuracy and AUC-ROC.

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    Credit card approval prediction using

    Machine learning

    Introduction:

    Credit card approval prediction is a critical task in the financial industry as it helps banks and financial
    institutions make informed decisions about whether to approve or decline credit card applications.
    Machine learning plays a key role in automating this process and improving its efficiency. This study
    aims to develop a credit card approval prediction model using machine learning techniques to
    improve the decision-making process and reduce the risk associated with granting credit to
    individuals.

    The goal of this research is to build a predictive model that can evaluate the creditworthiness of a
    credit card applicant based on various characteristics and historical data. By analysing a
    comprehensive set of attributes such as income, credit history, employment status and more, the
    model evaluates the likelihood that an applicant will default on their credit card payments. This
    predictive tool can enable financial institutions to make more accurate and consistent lending
    decisions, ultimately mitigating bad debt risk and improving the overall customer experience.

    Literature review:

    Traditional credit scoring models:

    Historically, credit card approval decisions have relied on traditional credit scoring models such as the
    FICO score. These models use historical credit data to predict an individual's creditworthiness. Even if
    they were effective, they may not capture all relevant information and may lead to missed
    opportunities or excessive risk.

    Machine learning approaches:

    Recent research has shown that machine learning models can significantly improve the prediction of
    credit card approvals. Various algorithms have been applied to this problem, including decision trees,
    random forests, logistic regression, and neural networks. These models use a wider range of features
    and can adapt to changing customer behaviour.
    Features and selection:

    Functional engineering is a critical aspect of credit card approval prediction. The researchers
    explored creating new features and selecting the most relevant ones to improve model performance.
    For example, creating a debt-to-income ratio or analysing spending patterns can provide valuable
    insights.

    Unbalanced data handling:

    In credit card approval prediction, the data is often unbalanced, most applicants are approved.
    Researchers have explored techniques such as resampling, subsampling, and the synthetic minority
    resampling technique (SMOTE) to address this issue and prevent model bias.

    Interpretable models:

    Interpretation is essential in the financial sector. Some studies have focused on the use of
    interpretable machine learning models, such as decision trees and rule-based systems, to ensure
    transparency and compliance in credit decision-making.

    Regulatory aspects:

    Financial institutions must follow regulatory guidelines when making credit decisions. Researchers
    have considered how machine learning models can be designed to meet these requirements,
    including fairness, transparency, and explain ability.

    Model Performance Rating:

    The performance of credit card approval prediction models is often measured using metrics such as
    accuracy, precision, recall, and area under the receiver operating characteristic curve (AUC-ROC). The
    research also explored custom metrics tailored to the specific needs of the financial industry.

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