Construct of borrower identity and credit scoring : affordable housing segment

Abstract

Credit scoring and risk analytic models have to an extent become purely analytical, faceless and completely inhumane.Borrowers are classified as a mere number or perhaps better said, a borrower’s worth has degenerated to that of derived risk scores.For banks credit application scoring provides a mechanism for managing risk and hence profits.From the quantitative study, it was established that imposed risk variables, had a negative selection outcome and provided grounds for arguing that there is a requirement for the further development of risk assessment scorecards that should be more informative and less exclusionary in terms of understanding of the affordable borrower market. These findings were further enforced by the qualitative interviews that were held with risk practitioners.As a consequence of imposed risk assumptions, it is argued that there are groups of borrowers that are intentionally and unintentionally excluded through credit scoring.Collectively these findings support the view that borrower identity is systematically fabricated on an on-going basis through the direct application of processes, systems and technologies as imposed by enterprise and credit scoring practitioners through risk assessment models.It was also argued that the future of application scorecard building would see more advanced or alternative variables being used which will give rise to a self-regulating borrower segment, less overtly disciplinary banks, and more pervasive credit bureau information and data constructs.