Finding Success with Offline Credit Scoring!

It’s tough credit scoring at the bottom of the pyramid. We know! That’s why we had Manuel Andrade Aparicio, COO at IluMéxico join us in a webinar to take you through how to create an offline credit scoring system with TaroWorks in just a few easy steps. It has worked for IluMéxico and could work for your organization too!

Step 1: Define possible criteria for loan performance

For IluMéxico, they used the following:

• Years lived in the community
• Days spent per week at location
• Community organization
• Involvement in community’s activities
• Occupation
• Income/Income regularity/Expenses
• Government program or receives money from government
• Field officer opinion

To help figure out a criteria, incorporate various dynamics of the community and its members. This will help you better understand potential loan performance.

Step 2: Programming your survey and assigning scores

The survey created by IluMéxico allows them to capture scores in TaroWorks. What IluMéxico did was define a score group which was the sum of all points based on the responses they received.

Remember with TaroWorks, you’re able to make credit scores available offline to field officers.

Step 3: Classify scores

IluMéxico used two parameters based on income and trust. When combined, they formed a credit classification system.

Step 4: Be patient and let the data roll in

IluMéxico began collecting data in September 2014 and by January 2016 they had finished 700 loans.

Remember things take time.

Step 5 & 6: Analyse and implement

You need to understand ‘What you’re doing’ and ‘What your expectations are!’

For example, IluMéxico did the following:

• Cross referencing loan performance to proposed indicators ==> Simple effective credit scoring methodology
• Finding correlation between both of them ==> Accessible loan installments for users (based on their income)
• Eliminate those without incident in their model ==> Better portfolio at risk and default rate performance

Have any questions or comments? Email us!