Bondora has analyzed more than 1 billion loan applications since launching its operations in 2009 and has developed significant experience in credit scoring using the data it has amassed. With a proprietary credit scoring database that provides critical insights into borrower behavior, Bondora has developed a high level of expertise in respect to consumer lending in Estonia, Finland and Spain.
Bondora employes an internally developed credit scoring model, using all of the data collected in earlier steps, to calculate a prospective borrower’s risk rating. The exact variables that influence credit risk ratings are determined and adapted as needed through statistical analyses. These may include income information, employment records and credit history, as well as marketing and other non-traditional data. Scorecards are prepared by Bondora’s consumer credit business unit scoring and price team and signed off on by the unit’s Head of Credit Risk. Scorecards are regularly evaluated and calibrated.
Scorecards provide one-year forward-looking estimates of the expected loss (i.e., the proportion of gross interest not received due to loan credit losses). Based on this data, loan applications are assigned a Bondora rating ranging from AA (the safest grade) to HR (the riskiest “investment grade” rating). Minimum and maximum expected expected losses per risk rating are provided in the following table:
|Risk Rating||Min EL%||Max EL%|