pareshg18 / loan-default-analysis

loan-application-analysis

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--------------THIS ANALYSIS IS DONE IN R USING JUPYTER NOTEBOOK----------------

Loan-default-analysis

This project is an analysis to identify customers who might default on their first payment. Through this project, I wanted to identify the important factors that indicate towards applicant defaulting.

DATA

The data is from a company called Net Pay Advance, that lends small loans to customers. Here, each row indicates a loan application. data

Data Cleaning and Exploring

Mean distribution

mean_dist

Correlation matrix

corr-credit

Models Tested

  1. Logistic Regression
  2. Decision Tree
  3. Random Forest
  4. Ada-boost

The models were evaluate using ROC curve, and initially the data was used as is (given imbalance class distribution). Later, SMOTE technique and up-sampling was used to balance the classes and the models were used again on the new data.

Results

The Random Forest was chosen, its parameters hyper-tuned.

rf_tuned

Due to a very limited training set, and poor predictor variables, such low AUC was achieved. However, variables such as Monthly Net Income, Months lived at residence, Having a Bank Account for a long duration, time left for the due date and Loan amount very important factors indicating default towars the first payment.