-
Have you ever wondered how lenders use various factors such as credit score, annual income, the loan amount approved, tenure, debt-to-income ratio etc. and select your interest rates?
-
The process, defined as ‘risk-based pricing’, uses a sophisticated algorithm that leverages different determining factors of a loan applicant.
Selection of significant factors will help develop a prediction algorithm which can estimate loan interest rates based on --
- clients
- information
On one hand, knowing the factors will help consumers and borrowers to increase their credit worthiness and place themselves in a better position to negotiate for getting a lower interest rate. On the other hand, this will help lending companies to get an immediate fixed interest rate estimation based on clients information. Here, your goal is to use a training dataset to predict the loan rate category (1 / 2 / 3) that will be assigned to each loan in our test set.
You can use any combination of the features in the dataset to make your loan rate category predictions. Some features will be easier to use than others.
The evaluation metric for this competition is Weighted F1 Score.