EDA Project
A consumer finance company which specialises in lending various types of loans to urban customers wants assistance to reduce their credit loss.
Business Understanding
The company has to make a decision when it receives a loan application, i.e. whether to approve it or not. The 2 type of risk associated here are:
- If the applicant is likely to repay the loan, then not approving the loan
- If the applicant is not likely to repay the loan, then approving the loan
Using the data given of the past loan applicants, identification of such patterns must be done that can help us to find the next defaulters.
Business Objective
Here the objective is to understand the driving factors/driver variables which result in to loan defaults. Using this knowledge the company can calculate the risk before lending money to a customer.