With a large volume of high-value credit applications to assess and qualify, credit professionals need to ensure they make fast and accurate decisions. Automated credit scoring can have major benefits for some companies and we’re here to inform you of how the process works.


What is an automated credit score? 

Credit scoring essentially evaluates how worthy someone is to receive good credit. Traditionally, banks and other credit organisations used a manual scorecard that fed variables into a static function to calculate a person’s credit score. 

As this traditional method can be unnecessarily long and sometimes inaccurate, nowadays it’s becoming more popular to use an automated credit scoring process. The automated process assists the lender in verifying and qualifying someone’s credit information through technology in minutes. With this modern process, lenders can be much more efficient and customers can get the answers they need almost instantaneously. 


How does automated credit scoring work?

There are many different credit scoring methods but all of them attempt to forecast these important factors:

  • Loan performance
  • Credit risk
  • Ability and willingness to repay the loan
  • Delinquency and bankruptcy rates

The automated credit scoring process works by weighing up all of the information about customers to determine whether or not they can be approved. This system automatically collects data from various credit reporting agencies, performing multiple checks on the customer, that would otherwise be extremely time-consuming manually, allowing the lender to quickly arrive at credit decisions. 

Consumers want fast decisions and by using an automated credit scoring system, loan approvals are sped up. Not only does this ensure the customer is satisfied, but it also gives the lender more time to work with borderline borrowers and those whose cases are more complex.


Benefits of an automated credit scoring process

Some of the top benefits of using an automated credit scoring process include:

  • Speed – Automated processes ensure each customer is evaluated in seconds. They can handle large quantities of information and allow the lender to be more productive and efficient.
  • Consistency and accuracy – With this kind of technology, human error is essentially eliminated. All factors that need to be considered in the credit score are consistent and analysed within an instant.
  • Less paperwork – Along with increased speed and accuracy for the customer, there is also less paperwork which is a big plus in today’s digitalised world.
  • Reduced personnel costs – Every stage in a credit department has a personnel cost attached to it. With automated credit scoring, personnel costs can be significantly reduced as fewer people are required to research, check and make decisions. 


Should your business use automated credit scoring?

If you are a business with a high number of customers then the answer should be obvious. An automated credit scoring system could be a very beneficial process and the way forward for your company. 

In this technological era if you don’t have an automated credit scoring system and are using the outdated traditional method your business is likely to be negatively affected. The younger generation wants every process, from mortgages to car loans, to be quick, easy and something they can do online without the need for unnecessary paperwork or appointments. 

Here at Lucid UX, we can provide bespoke software solutions to automate and simplify your business requirements. 

Find out how you can improve efficiency further by reading about how Robotic Process Automation (RPA) is delivering value to businesses.




Want to learn more?

Book a demo with one of our team members and we will work through your goals by getting to know you and your business.