Credit risk is the risk of a borrower not repaying a loan, credit card or any other type of credit facility. Credit risk is an important topic in the field of finance because banks and other financial institutions heavily invest in reducing their credit risk. The main reason behind the global financial crisis in 2008 was that mortgage loans were given to customers with poor credit scores. Poor credit score indicates that a customer has a higher probability of defaulting a loan. This was what happened during the recession in 2008
Project goal: The objective of this project is to build a model to predict probability of a client defaulting a loan.
Defaulting on a loan is the failure of a borrower to pay the principal or interest on a security or loan. The dataset has been collected from the UCI machine learning repository
The following steps will be followed in building the model.
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Data preparation and Pre-processing
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Exploratory Data Analysis
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Feature Engineering and Selection
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Model Development and Model Evaluation
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Hyperparameter Tuning