SANABEL: Credit Scoring Workshop: Building Viable Credit Scorecards for MFIs

This highly interactive 1-day workshop offered MFIs the opportunity to test credit scoring models and build a simple credit scorecard to take back and test at their financial institutions.

Credit scoring, the process of building statistical models to predict willingness and ability to repay loans, can help MFIs to increase their scale of lending and reach new markets that can’t be served by traditional lending. Credit scorecards are built from both external and in-house data and provide MFIs an automated and cost-effective lending tool. Use of nontraditional data like utility bills and mobile transactions can help underserved individuals and small businesses obtain credit for the first time, opening a whole new customer base for MFIs while lowering transaction costs.

Many MFIs struggle with building financial data to build scorecards or may lack the know-how to create viable scorecards. This session will provide an overview of credit scoring for MFIs, including best practices from around the world, and showcase simple credit scorecards, with real life data that institutions can use to build a more specialized scorecard for their institution.

1- Introduction on credit scoring – overview, definitions, how it works and scorecard examples
2- How to build an expert vs. statistical scorecard based on real world examples and data
3- Challenges and solutions in using scorecards for MFIs – how to implement at their institution