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Read more: Credit-Scoring Example |
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This is a typical area where Data Mining can help you uncover the underlying relationships between the different variables, and improve, validate and constantly monitor your business rules. In addition, Data Mining tools such as Bayesian Belief Networks allow you to combine existing expert knowledge with mathematical algorithms and statistics to optimize your return on investment.
ExampleAssume that one of your clients is not able to pay back his loan and you lose some money. Data Mining can re-evaluate this case by building a new set of rules that would have declined this client's loan. In addition, it will apply these new rules to all other subsequent cases as well, because it is very probable that other clients' credit application would have been declined as well. Only by comparing the two cases can you determine an optimal rule set.
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