COSMO - Integrating Personality Type with Credit Risk Assessment

Credit assessment is the process of evaluating the creditworthiness of an individual or organisation. Lenders, such as banks, typically use it to determine whether to extend credit to a borrower and, if so, on what terms. Credit assessment involves evaluating various factors, including the borrower's credit history, income, assets, and debts.

Credit assessment aims to determine the level of risk involved in lending to a particular borrower and to set appropriate terms and conditions for the loan. Other organisations can also use credit assessment to evaluate the creditworthiness of an individual or organisation before entering a financial arrangement.

The Credit and Lending industry heavily depends on reliable information to make accurate lending decisions and manage risks. One of the key sources of this information is credit reports and credit scores from credit information bureaus such as CRIF High Mark. But despite having full data coverage of formal lending channels, Credit Bureaus with only traditional data sources miss out on data on population, which the standard lenders do not serve.

These include unserved or underserved individuals and even small and medium-sized businesses, which tend to be at a disadvantage when they apply for loans due to the scarcity or unavailability of reliable third-party information on them.

A new way to score Credit Risk

Welcome to the world of Psychometric Credit Scoring; a Credit risk assessment model that evaluates personality traits such as Organization, discipline, honesty, social interactions and, yes, bed-making acumen.

Most of the financial institutions around the world have been providing loans to borrowers based on credit scores. This premise, however, loses its formidable self for first time borrowers and areas with emerging or no credit bureaus. CRIF can help you address these concerns with its multi-layered decision framework, COSMO. The tool utilizes Metadata score, Application Score and Psychometric score to assist the Loan Origination Decision System.

COSMO provides an instant personality assessment and highlights borrowers intent to pay to aid the loan approval decision. This tool can also be used for customer profiling and engagement

Map the risk with CRIF

A multi-layered decision framework that utilizes Metadata Score, Application Score and Psychometric Score to assist the Loan Origination Decision System.

Metadata Score:

Utilizes response behavior with respect to time and offers protection against fake responses

Application Score:

Proven traditional scoring tool that utilizes the demographic information of the applicant

Psychometric Score:

New alternate scoring tool that utilizes the personality type information of the applicant

Psychometric Score:

An alternate scoring tool that utilises the personality type information of the applicant

The tool is in the form of a Quiz – gamified with images and animations – for better customer experience. It would give the individual an instant personality assessment and the institution the decision for further evaluation. Inadvertently, the assessment can be also be used for further customer management purposes and engagements.

Geographies:

Currently available in India, Nepal, South East Asia, the Middle East, Africa

Localization:

As per market and segment requirements, keeping the main framework intact

Supported Languages:

Available in 6 regional Indian (Hindi, Bengali, Tamil, Telugu, Kannada, Marathi) and Global languages (English, French, Italian, Mandarin, Arabic, Bahasa, Malagasy, Tounsi, Nepalese, Cantonese)

Approach:

Multi-layered decision framework that utilizes Metadata score, Application Score and Psychometric score

COSMO - A Differentiator

A traditional credit score predicts the loan's likelihood of repayment based on the borrower's past repayment track record. However, in the absence of past repayment history, the loan officer may conduct a personal interview to assess the borrower’s creditworthiness. This may bring in personal biases in the system. CRIF provides a ready credit scoring platform for instant and objective risk evaluation for the applicant.

CRIF’s Psychometric assessment and credit scoring platform COSMO can assess an individual’s personality to gauge their ability to repay and intent to repay. The COSMO tool studies multiple personality dimensions such as Conscientiousness, Honesty, Discipline etc., considering the society’s cultural context and belief system. For example, Conscientious people are more likely to be responsible and organized towards their expenses and money management. Each personality dimension contributes to assessing the applicant's credit risk.

This credit scoring platform removes the masks of socio-economic background, level of education and other learned behaviour to provide a deep dive into your borrower’s psyche. It can also bring intangible data to the disposal of lenders, even for existing borrowers, to tailor the messaging for each customer based on their personality. Thus, it enables the lender to have a holistic view of the consumer and achieve personalisation of products and services..

How can personality test predict an individual’s creditworthiness?

BENEFITS OF COSMO

Increase approval rate
Underwriting more customers in general; including more ‘New to Credit’ customers

Lower Bad rate
Assess the ‘alternate’ imensions of ‘intent to pay’ to reduce false positives

Delight
Gamified UI/UX to enhance customer on-boarding experience

Reduce TAT
Power of 3 scores to take instant decisions