Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Clo
sin
g t
he
Ga
p B
etw
een
Cre
dit
Access a
nd R
isk M
anagem
ent
Cla
rk R
. A
bra
ha
ms
Ch
ief
Fin
an
cia
l A
rch
ite
ct,
SA
S I
ns
titu
te, In
c
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Ag
en
da
In
tro
du
cti
on
T
he
Need
fo
r G
reate
r C
red
it A
ccess
F
ram
ew
ork
Co
nstr
uc
tio
n
B
ig P
ictu
re V
iew
–P
rod
uc
t L
ine
s / I
nsti
tuti
on
s / C
ou
ntr
ies
C
on
clu
sio
n
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Cre
dit A
cce
ss
Banked
vs. U
nb
an
ke
d
B
an
ke
d c
onsum
ers
obta
in low
er
fees o
n t
ransactions, hig
her
retu
rns o
n s
avin
gs,
and
low
er
rate
s o
n lo
an
s
T
he U
nbanked
•D
efi
nit
ion
? –
Ha
ve
no
acco
un
t w
ith
a r
eg
ula
ted
de
po
sit-t
akin
g in
stitu
tio
n
−W
here
? –
In e
very
countr
y!
−S
co
pe?
–V
aries,
but
as m
any a
s 4
0-8
5%
of consum
ers
; urb
an a
nd r
ura
l
•W
ho
? –
Ske
we
d, b
ut n
ot re
str
icte
d to
, lo
we
r in
co
me
/le
ss fo
rma
lly
educate
d
•W
ha
t? –
De
ad
Ca
pit
al e
stim
ate
s o
f u
p to
$1
.0 B
illio
n I
n M
exic
o a
lon
e!
−C
on
seq
uen
ces?
–T
he U
nbanked P
ay a
Po
vert
y T
ax
−H
ow
Mu
ch
? –
In s
om
e insta
nces 1
5%
, or
nearly 2
month
s o
f w
ages
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Cre
dit A
cce
ss
May B
e Im
pro
ve
d B
y C
ha
ng
es in
Sta
tus Q
uo
•C
olo
mb
ia: T
he
me
of B
an
ca
riza
cio
n–
Dr.
Alb
ert
o C
arr
asquill
a, M
inis
tro d
e
Hacie
nda y
Cre
dito P
ublic
o [W
orld B
ank P
olic
y R
esearc
h W
ork
ing P
aper
3834 (
2006)]
1.
Indic
ato
rs o
f pote
ntial dem
and
2.
Su
ita
bili
ty/a
ffo
rda
bili
ty o
f lo
an
pro
du
cts
offe
red
3.
Re
vie
w o
f re
gu
latio
ns
4.
Te
ch
no
log
ica
l co
nsid
era
tio
ns
5.
Physic
al access to b
anks in the c
om
munity
6.
Cu
sto
me
r cu
ltu
re / n
orm
s / fin
an
cia
l h
ab
its
7.
Fin
an
cia
l e
du
ca
tio
n
8.
Tru
st
•M
ex
ico
: S
imila
r a
pp
roa
ch
es e
ch
oe
d –
World B
ank R
eport
No.
32418
-MX
(2005)
In
form
atio
na
l (1
,7,8
)
P
rod
uct (2
,6)
P
rice
(2
,6)
L
oca
tio
n/n
eig
hb
orh
oo
d (
5)
T
echnolo
gic
al (4
)
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Cre
dit A
cce
ss
Ana
lytic F
ram
ew
ork
s a
nd
In
form
ation
Tech
no
logy C
an
Help
•T
rus
t–
Gre
ate
r T
ranspare
ncy /
Dis
clo
sure
–N
o s
ecre
t re
cip
es
–F
oste
rs U
nders
tandin
g -
-B
orr
ow
er
Vie
w =
Lender
Vie
w
–G
reate
r A
ccura
cy--
yet
more
sim
ple
; T
horo
ugh –
yet
more
concis
e
–C
onsid
ers
full
conte
xt
–N
o o
ne-s
ize-f
its-a
ll
–G
rounded in c
om
mon s
ense –
foste
rs c
onfidence
•P
hys
ica
l b
an
kin
g p
res
en
ce
in
co
mm
un
itie
s
–M
easuring m
ark
et
pote
ntial –
incom
e/s
pend p
er
acre
–In
form
al econom
y a
nd d
em
and f
or
cre
dit
Neig
hb
orh
oo
d o
f N
eed
Neig
hb
orh
oo
d o
f O
pp
ort
un
ity
Po
ve
rty R
ate
2X
Na
t’l A
vg
.S
ign
ific
an
t A
gg
rega
te H
H In
co
me
Unem
plo
ym
ent
2X
Nat’l A
vg.
Sig
nific
ant A
ggre
gate
Reta
il S
pen
din
g
Overc
row
din
g 4
X N
at’l A
vg.
Media
n H
om
e V
alu
es A
bove N
at’l A
vg.
Agin
g H
ousin
g S
tock
Ow
ner
Occupancy b
y B
uild
ing 7
5%
Sam
e N
eig
hb
orh
oo
d !
! –
Is G
lass H
alf
Fu
ll o
r H
alf
Em
pty
?!
O
n t
he
Su
rfac
e
B
as
ed
on
20
00
Cen
su
s a
nd
Pu
blic
Da
ta
U
po
n D
ee
per
Ins
pec
tio
n
B
as
ed
on
Dri
llD
ow
n A
naly
sis
by S
ocia
l C
om
pa
ct
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Cre
dit A
cce
ss
Analy
tic F
ram
ew
ork
s a
nd I
nfo
rma
tio
n T
ech
no
logy
Can H
elp
•P
rod
uc
t fo
cu
s
–B
usin
ess P
ractice
s -
-M
akin
g M
on
ey W
hile D
oin
g G
oo
d
B
ette
r C
usto
mer
Segm
enta
tion
P
roducts
Geare
d T
ow
ard
s L
ow
/Modera
te I
ncom
e T
iers
H
ow
to
do
au
tom
ate
d u
nd
erw
ritin
g
of
loa
ns fo
r t
he
unbanked
M
issin
g/incom
ple
te d
ata
–la
ck o
f cre
dit b
ure
au r
ecord
P
roble
ms o
f docum
enta
tion/
verification
•P
ric
ing
–S
hould
be M
ark
et-
driven
–D
eposit/L
oan A
ggre
gation –
Incre
ase S
cale
to
Lo
wer
Co
st
P
ow
er
in n
um
be
rs –
poole
d s
avin
gs c
an b
e a
cheap s
ourc
e
of
fun
ds
R
isk P
oolin
g / D
ivers
ific
ation / R
isk S
hari
ng o
n t
he L
endin
g
Sid
e
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Fra
ud F
ram
ew
ork
& C
red
it F
ram
ew
ork
Syne
rgy
Help
s t
o C
lose t
he G
ap
Cre
dit R
isk A
ssessm
ent:
Th
e N
ew
Lendin
g S
yste
m for
Borr
ow
ers
, Lenders
& I
nvesto
rs, C
lark
Abra
ham
s &
Min
gyuan Z
hang,
copyrig
ht
2009,
SA
S Institu
te, In
c.
Reprin
ted w
ith p
erm
issio
n o
f J
ohn
Wile
y &
Sons, In
c. [P
age 1
26]
Ap
plic
ant-
Sup
plie
d
Info
rmat
ion
Au
the
ntica
tio
n
& F
rau
d F
ilte
r
A
pplic
ant
R
efe
ren
ce
s
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
5 C
’s o
f C
red
itP
rim
ary
Fa
cto
rs –
Mu
st
Co
ver
All 5
C’s
fo
r S
ec
ure
d L
oa
ns
C
ha
rac
ter
C
ap
acit
y
C
ap
ital
C
olla
tera
l
C
on
dit
ion
s
B O R R O W E R
T R A N S A C T I O N
C
red
it R
isk A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. [p
ag
es 5
4-5
6]
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
How
to
Mod
el C
hara
cte
r?
Perf
orm
an
ce o
n e
xis
tin
g /
past
fina
ncia
l o
blig
atio
ns
•P
aym
ent
his
tory
fro
m c
redit b
ure
au
•S
elf-r
eport
ed a
nd v
erified
P
ers
iste
nce
•W
ill / d
ete
rmin
ation o
f th
e b
orr
ow
er
−W
ork
eth
ic –
will
ing to w
ork
multip
le/d
iffe
rent/part
-tim
e jobs w
hen n
eeded
−W
ork
His
tory
/job s
tabili
ty/ tr
ain
ing/
experience/
education
−M
ark
eta
ble
/ t
ransfe
rable
skill
s
•D
ependabili
ty o
f th
e b
orr
ow
er
−L
ett
ers
of
Re
fere
nce
–C
ha
racte
r
−E
sta
blis
hed in the c
om
munity v
ers
us tra
nsie
nt
•F
aith
−S
erv
ice to c
ountr
y,
com
munity,
relig
ious o
rganiz
ation
−S
ocia
l netw
ork
–fa
mily
, fr
iends,
com
munity
−R
esponsib
le b
ehavio
r
•S
trength
−P
hysic
al health
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Myth
-Busting
1.
Have to b
e in d
ebt to
be w
ort
hy o
f a loa
n
2.
Poor
people
are
ris
ky
1-P
oo
r/N
on
e
2-
Fair
3
-G
oo
d
4-
Very
Str
on
g
Facto
r1
23
4
Pers
iste
nc
e
Str
en
gth
Fait
h
Cre
dit
His
tory
Cap
acit
y
Cap
ital
Co
llate
ral
Co
nd
itio
ns
Me
et
Es
tella
My L
ifelo
ng
Fri
en
d &
Men
tor
1961 –
Ag
e 4
7, n
o fo
rma
l e
du
ca
tio
n, n
o p
erm
an
en
t jo
b b
ut ste
ad
y
do
me
stic w
ork
fo
r se
ve
ral fa
mili
es; W
ag
e: $
1/h
r; L
ife
sa
vin
gs
$4
,70
0 =
20
% d
ow
n p
aym
en
t o
n $
21
,00
0 d
up
lex h
om
e in
Sa
n
Fra
ncis
co, le
avin
g n
o fin
an
cia
l cu
sh
ion
. 1
5 y
ea
r fixe
d r
ate
lo
an
.
Sh
e r
en
ted
ou
t th
e lo
we
r fla
t. H
ere
’s h
ow
sh
e r
ate
d a
t lo
an
clo
sin
g:
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Myth
-Busting
1.
Have to b
e in d
ebt to
be
wort
hy o
f a loan
2.
Poo
r p
eo
ple
are
ris
ky
Re
st
of
the
Sto
ry …
M
ort
ga
ge
pa
id in
fu
ll in
13
years
into
term
(a
t age
60)
H
om
e s
old
in
20
05
fo
r $
1.4
mill
ion
, w
ith
ze
ro d
eb
t
200
9 U
pd
ate
Cu
rren
t A
ge:
95
Mil
lio
na
ire
!!
2004 –
Este
lla’s
of
90
thB
irth
day
Part
y a
t H
er
Ho
me o
f 43 Y
ears
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Wh
at A
bou
t th
e C
redit B
ure
au S
co
re?
Sco
re-B
ased
Rati
ng
s
Go
od
: 7
50
+
Fair
: 660
-74
9
Po
or:
<
66
0
Ca
teg
ori
ca
l R
ati
ng
s
CC
AF
Pri
ma
ry
Fa
cto
r R
ati
ng
s
Fu
ll T
ran
sp
are
ncy
Bla
ck
Bo
x
Sc
ori
ng
Mo
de
l
T
heore
tically
you c
ould
have a
separa
te s
coring m
odel fo
r each o
f th
e 5
C’s
of
Cre
dit.
H
ow
ever,
th
e t
rade
-off is loss o
f tr
anspa
rency –
with s
coring y
ou a
re c
reating
more
secre
t sauce!
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Sim
plif
ied
C
CA
F E
xam
ple
Pri
ma
ry F
act
ors
R
ati
ng
Ca
tego
ries
& V
alu
e A
ssig
nm
ents
Ca
pit
al:
Liq
uid
Ass
ets
(mea
sure
d
as m
on
ths
of
rese
rves
)
Go
od
-
8+
mo
nth
s
Fa
ir-
3-7
mo
nth
s
Poo
r-
< 3
mo
nth
s
Ch
ara
cter
: C
red
it
Pa
ym
ent
His
tory
for
all
trad
e li
nes
Go
od
-
Cas
es 7
, 1
0,
11
(S
ee
Pri
or
Sli
de!
)
Fair
-
Cas
es 4
, 8
, 1
2
Poo
r-
Cas
es 1
-3,
5-6
,
9
Ca
pa
city
: D
TI
Sa
vin
gs
Ra
te
Go
od
-
<3
0%
>8
% (
H)
Fair
-
31
-44
%
3-7
% (
M)
Poo
r-
45
%+
< 3
% (
L)
Co
lla
tera
l: L
TV
G
oo
d-
70
% o
r le
ss
Fa
ir-
71
%-8
9%
Po
or-
90
% o
r m
ore
Co
nd
itio
ns:
Fu
ture
DT
I
Fu
ture
LT
V
Lo
w-
<T
hre
sho
ld
< 1
00
% i
n
5yrs
Hig
h-
All
Oth
er
Co
mb
inat
ion
s
S
om
e
un
de
rwri
tin
g
me
tric
s
as
so
cia
ted
wit
h
pri
ma
ry f
ac
tor
Ca
teg
ori
es
T
hre
sh
old
s m
ay
va
ry b
y p
rod
uc
t,
ma
rke
t, p
rog
ram
, o
r c
ha
nn
el
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Se
co
nd
ary
Fa
cto
r D
efin
itio
ns &
Ra
tin
gs
GO
OD
FA
IRP
OO
R
Sim
ila
r H
ou
sin
g
Ex
pen
se
12
0%
or
less
of
pre
vio
us
pa
ym
ent
>1
20
-13
5%
of
pre
vio
us
pa
ym
ent
>1
35
% o
f p
rev
iou
s
pa
ym
ent
Tim
e in
Pro
fess
ion
5 y
rs +
3
-4 y
rs<
3 y
rs
Str
on
g L
iqu
id
Ass
ets
>1
0%
Lo
an
Am
t.5
to
9%
Lo
an
Am
t.4
% o
r le
ss L
oa
n A
mt
His
tory
of
Ha
nd
lin
g
Hig
her
Deb
t
3+
yrs
1-2
yrs
<1
yr
Dis
cret
ion
ary
Inco
me
> $
2M
/mo
.$
1 t
o 2
M/m
o.
<$
1M
/mo
.
Rel
ati
on
ship
2+
lo
an
, d
epo
sit,
inv
estm
ent
acc
ou
nts
1 l
oa
n, d
epo
sit,
or
inv
estm
ent
acc
ou
nt
No
ne
CC
AF
Exa
mp
le
C
red
it R
isk A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. [P
ag
e 6
7,
Exh
ibit
2.1
0]
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Decis
ion T
ab
le
CC
AF
Exa
mp
leV
LNR
AB
TYLO
WLO
WH
IGH
HIG
H
PY
MTH
IST
CA
PA
CIT
YC
AP
ITA
LC
OLL
ATR
LSE
CO
ND
RY
NO
YES
NO
YES
PO
OR
HIG
HST
RO
NG
HIG
HC
ELL
NO
.1
29
13
01
31
13
2A
CTI
ON
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
EA
PP
RR
OV
E
PO
OR
HIG
HSU
PER
IOR
LOW
CEL
L N
O.
13
31
34
13
51
36
AC
TIO
ND
ECLI
NE
DEC
LIN
ED
ECLI
NE
DEC
LIN
E
PO
OR
HIG
HSU
PER
IOR
MO
DER
ATE
CEL
L N
O.
13
71
38
13
91
40
AC
TIO
NA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
E
PO
OR
HIG
HSU
PER
IOR
HIG
HC
ELL
NO
.1
41
14
21
43
14
4A
CTI
ON
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
FAIR
LOW
LOW
LOW
CEL
L N
O.
14
51
46
14
71
48
AC
TIO
ND
ECLI
NE
DEC
LIN
ED
ECLI
NE
DEC
LIN
E
FAIR
LOW
LOW
MO
DER
ATE
CEL
L N
O.
14
91
50
15
11
52
AC
TIO
ND
ECLI
NE
DEC
LIN
ED
ECLI
NE
DEC
LIN
E
FAIR
LOW
LOW
HIG
HC
ELL
NO
.1
53
15
41
55
15
6A
CTI
ON
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
ED
ECLI
NE
FAIR
LOW
MO
DER
ATE
LOW
CEL
L N
O.
15
71
58
15
91
60
AC
TIO
ND
ECLI
NE
DEC
LIN
ED
ECLI
NE
DEC
LIN
E
FAIR
LOW
MO
DER
ATE
MO
DER
ATE
CEL
L N
O.
16
11
62
16
31
64
AC
TIO
ND
ECLI
NE
DEC
LIN
ED
ECLI
NE
DEC
LIN
E
FAIR
LOW
MO
DER
ATE
HIG
HC
ELL
NO
.1
65
16
61
67
16
8
AC
TIO
NA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
E
GO
OD
MO
DER
ATE
LOW
HIG
HC
ELL
NO
.3
45
34
63
47
34
8
AC
TIO
NA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
E
GO
OD
MO
DER
ATE
MO
DER
ATE
LOW
CEL
L N
O.
34
93
50
35
13
52
AC
TIO
ND
ECLI
NE
DEC
LIN
ED
ECLI
NE
DEC
LIN
E
GO
OD
MO
DER
ATE
MO
DER
ATE
MO
DER
ATE
CEL
L N
O.
35
33
54
35
53
56
AC
TIO
NA
PP
RR
OV
EA
PP
RR
OV
EA
PP
RR
OV
EA
PP
RR
OV
E
GO
OD
MO
DER
ATE
MO
DER
ATE
HIG
HC
ELL
NO
.3
57
35
83
59
36
0A
CTI
ON
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
GO
OD
MO
DER
ATE
STR
ON
GLO
WC
ELL
NO
.3
61
36
23
63
36
4A
CTI
ON
DEC
LIN
ED
ECLI
NE
DEC
LIN
EA
PP
RR
OV
E
Cre
dit
Ris
k A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. [P
ag
es 8
5-8
6,
Exh
ibit
2.2
2]
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
CC
AF
Exa
mp
leD
eclin
e D
ecis
ion
Ana
lysi
sSE
GFA
CTO
R 1
FAC
TOR
2FA
CTO
R 3
FAC
TOR
4SE
GFA
CTO
R 1
FAC
TOR
2FA
CTO
R 3
FAC
TOR
4
REF
NET
GA
INN
ET G
AIN
NET
GA
INN
ET G
AIN
REF
NET
GA
INN
ET G
AIN
NET
GA
INN
ET G
AIN
NB
RR
ESU
LTR
ESU
LTR
ESU
LTR
ESU
LTN
BR
RES
ULT
RES
ULT
RES
ULT
RES
ULT
10
2P
YM
THIS
TC
AP
ITA
LC
OLL
ATR
LSE
CO
ND
RY
13
1P
YM
THIS
TV
LNR
AB
TYC
AP
ITA
LSE
CO
ND
RY
76
56
40
05
73
22
01
6A
PP
RR
OV
EA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
10
3P
YM
THIS
TV
LNR
AB
TYC
OLL
ATR
LC
AP
ITA
L1
33
PY
MTH
IST
CO
LLA
TRL
SEC
ON
DR
YV
LNR
AB
TY
11
83
23
23
28
06
01
20
AP
PR
RO
VE
DEC
LIN
ED
ECLI
NE
DEC
LIN
EA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
E1
04
PY
MTH
IST
CA
PIT
AL
VLN
RA
BTY
CO
LLA
TRL
13
4P
YM
THIS
TC
OLL
ATR
LSE
CO
ND
RY
VLN
RA
BTY
11
85
24
04
07
46
60
0
AP
PR
RO
VE
DEC
LIN
ED
ECLI
NE
DEC
LIN
EA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
E
10
7P
YM
THIS
TV
LNR
AB
TYC
AP
ITA
LSE
CO
ND
RY
13
5P
YM
THIS
TC
OLL
ATR
LV
LNR
AB
TYSE
CO
ND
RY
10
05
24
02
01
22
60
40
20
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
EA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
E
10
8P
YM
THIS
TV
LNR
AB
TYC
AP
ITA
LSE
CO
ND
RY
13
6P
YM
THIS
TC
OLL
ATR
LV
LNR
AB
TYSE
CO
ND
RY
85
40
40
01
12
60
32
0
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
EA
PP
RR
OV
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
E
10
9P
YM
THIS
TC
OLL
ATR
LC
AP
ITA
LSE
CO
ND
RY
13
9P
YM
THIS
TV
LNR
AB
TYC
OLL
ATR
LSE
CO
ND
RY
11
68
74
77
12
67
25
24
4
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
ED
ECLI
NE
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
E
11
0P
YM
THIS
TC
OLL
ATR
LC
AP
ITA
LSE
CO
ND
RY
14
0P
YM
THIS
TV
LNR
AB
TYC
OLL
ATR
LSE
CO
ND
RY
11
28
65
20
90
44
28
0
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
ED
ECLI
NE
AP
PR
RO
VE
AP
PR
RO
VE
AP
PR
RO
VE
DEC
LIN
E
11
1P
YM
THIS
TC
OLL
ATR
LC
AP
ITA
LSE
CO
ND
RY
14
5C
OLL
ATR
LC
AP
ITA
LC
AP
AC
ITY
SEC
ON
DR
Y
11
22
02
01
37
57
03
88
AP
PR
RO
VE
DEC
LIN
ED
ECLI
NE
DEC
LIN
EA
PP
RR
OV
ED
ECLI
NE
DEC
LIN
ED
ECLI
NE
Cre
dit
Ris
k A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. [P
ag
es 8
8-8
9,
Exh
ibit
2.2
4]
18
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Polic
y A
dju
stm
en
tC
-CA
F Isola
tes Im
pacts
of C
hanges in R
isk T
ole
rance
F
air
Le
nd
ing
Co
mp
lian
ce:
Inte
llig
en
ce a
nd
Im
pli
cati
on
s f
or
Cre
dit
Ris
k M
an
ag
em
en
t, C
lark
Ab
rah
am
s a
nd
Min
gyu
an
Zh
an
g, C
op
yri
gh
t ©
2008,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. .
[Pag
es 2
20
-222]
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
CC
AF
Mod
el V
alid
atio
nA
bili
ty t
o A
pp
ly C
om
mo
n S
en
se
Han
dle
Liq
uid
Ass
ets
Cre
dit
His
tory
Deb
t-to
-
Inco
me
Rati
o
Loan
-
to-
Valu
e
Rati
o
1G
ood
Good
Low
Low
2G
ood
Good
Hig
hL
ow
3G
ood
Fair
Low
Low
4G
ood
Fair
Hig
hL
ow
5G
ood
Poor
Low
Low
6G
ood
Poor
Hig
hL
ow
7F
air
Good
Low
Low
8F
air
Good
Hig
hL
ow
9F
air
Fair
Low
Low
10
Fa
irF
air
Hig
hL
ow
11
Fair
Poor
Low
Low
12
Fair
Poor
Hig
hL
ow
13
Poor
Good
Low
Low
14
Poor
Good
Hig
hL
ow
15
Poor
Fair
Low
Low
16
Poor
Fair
Hig
hL
ow
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Ho
w d
oes C
CA
F A
dd
ress
Iss
ues B
ett
er?
Pain
Cre
dit
Bu
reau
Sco
reC
CA
F
Safe
ly A
fford
s G
reate
r
Cre
dit A
ccess
To
o B
lunt
and
To
o H
ars
h a
n In
str
um
en
t L
oca
tes P
ocke
ts o
f O
ppo
rtu
nity &
Ap
pro
ve
s Q
ualif
ied
Bo
rro
we
rs D
eclin
ed
by
Sco
ring
Relia
bili
tyA
ssum
es
Past D
ete
rmin
es the F
utu
re
Less
Re
leva
nt
Go
ing
Forw
ard
; L
ose
sP
ow
er
Ove
r T
ime
Incorp
ora
tes F
utu
re S
cenarios;
Facto
rs in
Eco
no
my
& M
ark
ets
; G
ain
s
Po
we
rO
ve
rT
ime
Cla
rity
Bla
ck B
ox
Full
Dis
clo
sure
Am
big
uity
IdenticalS
core
s for
Borr
ow
ers
Havin
g
Diffe
ren
tQ
ualif
ica
tion
s
Identical H
andle
s f
or
Borr
ow
ers
With
Sa
me
Qu
alif
ica
tion
s
Cre
dib
ility
No
t In
tuitiv
e, C
ann
ot
Te
ll b
y I
nspe
ction
Ma
ke
s S
ense
, C
an B
e L
og
ica
lly V
alid
ate
d
Com
pre
hensiv
eness
•N
arr
ow
R
esultin
g in
Ove
r-e
mp
ha
sis
of
Cre
dit B
ure
au
In
form
atio
n / In
clu
sio
n o
f
Irre
leva
nt F
acto
rs (
Re
late
s to
Lack o
f
Co
he
ren
ce
)
•O
ne-S
ize
Fits A
ll
•C
ove
rs A
ll5
C’s
of C
redit
•C
onsid
ers
fu
ll co
nte
xt o
f b
orr
ow
er,
co
llate
ral, lo
an
pro
du
ct,
and
econ
om
ic/m
ark
et fa
cto
rs
Costly
Model R
e-
Develo
pm
ent
•S
tatic S
co
reca
rdB
ecom
es L
ess P
redic
tive
Ove
r T
ime
.
•C
han
ge
s In
Eco
no
my/M
ark
ets
/Bo
rro
win
g
Po
pu
lation
Acce
lera
te L
oss o
f P
ow
er.
•W
ors
en
ing
Pe
rfo
rma
nce
Loo
ms M
ore
He
avily
as M
ode
l R
epla
cem
ent A
ppro
ach
es
•A
dap
tive
Syste
m B
ecom
es M
ore
Pre
dic
tive
Ove
r T
ime
.
•R
elie
so
n P
rove
n L
en
din
g P
rin
cip
les a
nd
Re
aso
n, N
ot P
ure
ly o
n S
tatistical
Co
rre
lation
s
•C
ontin
uo
usly
Up
da
tes D
ata
and
Loa
n
Pe
rfo
rma
nce
.
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
CC
AF
TR
AD
ITIO
NA
L C
RE
DIT
SC
OR
ING
CU
T-O
FF
AN
AL
OG
Y
•B
ett
er
Separa
tion A
chie
ved b
y C
losin
g U
/W G
ap (
above)
•F
urt
her
Pre
dic
tive S
trength
Via
Secondary
Facto
rs (
belo
w)
12
Gre
ate
r
Cre
dit
Acce
ss
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Cre
dit A
cces
s V
iew
ed T
hrou
gh 4
of 5
C’s
of C
redi
t Plu
s C
redi
t His
tory
Len
s
Ho
me L
oan
Ori
gin
ati
on
Mix
Fo
r G
oo
d a
nd
Po
or/
No
ne C
red
it H
isto
ry R
ati
ng
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
5 C
’S O
F C
RE
DIT
CLA
SS
IFY
ING
BO
RR
OW
ER
S U
SIN
G C
CA
F
No
.B
orr
ow
er
Occ
up
atio
nC
CA
F H
AN
DLE
1st C
2n
d
C3
rd C4
th C5
th CSe
c.
Fact
ors
1N
ate
Sale
sman
28
9G
LL
LH
Y/N
2B
eth
Pro
gram
me
r2
93
GL
LM
HY/
N
3B
ob
Para
lega
l3
01
GL
ML
HY/
N
4Ji
llEx
ec A
dm
in3
37
GM
LL
HY/
N
5Jo
eP
lum
ber
24
7F
HL
ML
Y/N
6C
arl
Co
nst
ruct
ion
20
0F
ML
ML
Y
7Sa
lina
Nu
rse
21
1F
MM
ML
Y/N
8X
avie
rA
cco
un
tan
t2
23
FM
STM
LY/
N
9Ju
lieTe
ach
er
16
7F
LM
HL
Y/N
Cre
dit
Ris
k A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h p
erm
issio
n o
f J
oh
n W
iley &
So
ns
, In
c. [p
ag
e 2
02,
Exh
ibit
4.1
3]
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
5 C
’S O
F C
RE
DIT
CC
AF
CO
MP
AR
ED
WIT
H C
RE
DIT
BU
RE
AU
SC
OR
E
Bu
reau
Sco
reC
CA
F Sp
ann
ing
5 C
's
No
.B
orr
ow
er
Occ
up
atio
nC
red
it
Sco
reSu
b-
pri
me
?Su
b-
pri
me
?C
CA
FSc
ore
Loan
D
eci
sio
n
1N
ate
Sale
sman
75
2No
Yes
67
0D
ECLI
NE
2B
eth
Pro
gram
mer
76
1No
Yes
67
8D
ECLI
NE
3B
ob
Para
lega
l7
56
No
Yes
67
4D
ECLI
NE
4Ji
llEx
ec A
dm
in7
47
No
Yes
66
7D
ECLI
NE
5Jo
eP
lum
ber
65
8Yes
No
73
7A
PP
RO
VE
6C
arl
Co
nst
ruct
ion
64
5Yes
No
75
0A
PP
RO
VE
7Sa
lina
Nu
rse
65
3Yes
No
75
9A
PP
RO
VE
8X
avie
rA
cco
un
tan
t6
40
Yes
No
74
2A
PP
RO
VE
9Ju
lieTe
ach
er6
58
Yes
No
76
2A
PP
RO
VE
Cre
dit
Ris
k A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. [p
ag
e 2
03,
Exh
ibit
4.1
3]
Gre
ate
r
Cre
dit
Access
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Ea
rly W
arn
ing
Mo
nito
rs a
nd
Lim
its H
igh
Ris
k P
ocke
ts o
f T
ran
sa
ctio
ns
Bo
rro
wers
Liv
ing
Paych
eck
-to
Paych
eck w
ith
No
Savin
gs a
nd
Vu
lnera
ble
to C
ha
ng
es
in
In
tere
st
Ra
tes
an
d C
oll
ate
ral V
alu
e
Cre
dit
Ris
k A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. [p
ag
e 2
04,
Exh
ibit
4.1
5]
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Aff
ord
s G
rea
ter
Cre
dit A
cce
ss
Fin
ds Q
ua
lifie
d B
orr
ow
er
/ C
olla
tera
l / P
rod
uct C
om
bin
atio
ns
Bo
rro
we
rs w
ith
Lo
w/M
od
era
te C
ap
acity/C
ap
ita
l, b
ut h
avin
g M
od
era
te/H
igh
Co
llate
ral a
nd
Lo
w V
uln
era
bili
ty
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
”A
gg
re
gate
” C
CA
F
Fra
me
wo
rk
All L
oa
n T
yp
es
Le
vels
of C
CA
F A
pplic
ation
In
sta
nc
e o
f
CC
AF
Ha
nd
le
Cla
ssific
atio
n o
f
Bo
rrow
er a
nd
L
oa
n
CC
AF
Ho
listic
Sc
ore
”G
en
eric
” C
CA
F
Fra
me
wo
rk
Te
mp
late
s
Sp
ec
ific
L
oa
n
Typ
es
Pro
du
ct-sp
ec
ific
Cre
dit
Bu
reau
B
orr
ow
er
Co
nto
ur
Cla
ssific
atio
n
of B
orrow
er
Refr
esh
ed
Peri
od
ically
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Cre
dit R
isk A
ssessm
ent: T
he N
ew
Lendin
g S
yste
m f
or
Borr
ow
ers
, Lenders
& Investo
rs, C
lark
Abra
ham
s &
Min
gyuan Z
hang, copyright
2009, S
AS
Institu
te,
Inc. R
eprinte
d w
ith p
erm
issio
n o
f J
ohn W
iley
& S
ons, In
c. [P
age 217, E
xhib
it 5
.2]
*P
ert
ain
s t
o A
llT
yp
es
of
Co
ns
um
er
an
d S
ma
ll
Bu
sin
es
s L
en
din
g
Bo
rro
we
rsG
et
Mo
re D
isc
los
ure
on
Ho
w T
hey
Ra
te a
nd
Lo
an
s
Th
ey
Ca
n R
ep
ay
Le
nd
ers
Off
er
the
Rig
ht
Pro
du
cts
at
the
Rig
ht
Pri
ce
at
the
Rig
ht
Tim
e
Inve
sto
rsG
et
Mo
re In
form
ati
on
an
d A
cc
ura
te
Ra
tin
gs
Th
ey A
llG
et
the
Sam
eV
iew
an
d
Ge
t M
ore
Co
nn
ec
ted
!!
Cre
dit
Access B
oo
ste
d V
ia S
eco
nd
ary
Ma
rket
Fin
an
cia
l C
risis
: To
o M
an
y D
isco
nn
ects
!!
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Bank F
ina
ncia
l M
an
ag
em
ent
Implic
ation
sG
ett
ing
a B
ett
er
Han
dle
on
th
e C
usto
mer-
Dri
ven
Po
rtio
n o
f th
e B
ala
nce S
heet!
Secu
rity
R
atin
g Ti
ers
Fou
r-Ye
ar
Ave
rage
C
um
ula
tive
C
orp
ora
te
Bo
nd
Def
ault
P
rob
abili
ty
CC
AF
Fou
r-Ye
ar
Avg
. Cu
m.
Mo
rtga
ge
Def
ault
Pro
b.
CC
AF
Ho
listi
c Sc
ore
R
ange
Nu
mb
er
of
Han
dle
s
AA
A0
.15
00
.14
78
22
-8
33
12
AA
0.2
50
0.2
86
81
8 -
82
15
A0
.44
00
.44
88
11
-81
71
4
Baa
1.2
70
1.2
40
77
0 -
81
01
03
Ba
8.6
80
5.5
02
71
8 -
76
61
38
B1
9.4
00
19
.59
67
15
-69
08
6
CC
C3
5.9
70
32
.04
56
78
-6
84
35
Be
low
CC
Cn
/a4
2.6
43
65
2 -
67
73
9C
red
it R
isk A
sse
ssm
en
t: T
he
New
Le
nd
ing
Syste
m f
or
Bo
rro
wers
, L
en
ders
& In
vesto
rs,
Cla
rk A
bra
ha
ms &
Min
gyu
an
Zh
an
g, co
pyri
gh
t
2009,
SA
S I
ns
titu
te, In
c.
Rep
rin
ted
wit
h
pe
rmis
sio
n o
f J
oh
n W
iley &
So
ns
, In
c. [P
ag
e 2
40,
Exh
ibit
5.9
]
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Co
mm
on
Fra
me
wo
rk D
efin
itio
ns A
cro
ss C
ou
ntr
ies
CC
AF
Ra
tin
g T
iers
–H
yp
oth
etica
l %
Dis
trib
utio
n
CC
AF
Tie
rs
Mexic
oC
olo
mb
iaA
rgen
tin
aB
razil
Gu
ate
mala
Peru
12
23
41
2
23
45
67
5
35
79
10
86
49
711
13
10
11
51
41
01
31
311
12
61
61
81
51
41
51
37
18
23
19
20
18
19
Be
low
73
32
92
52
03
03
2A
ve
rag
e
Defa
ult
Ra
te6
.26
.65
.65
.35
.75
.8A
vg
. C
CA
F
Score
69
96
96
70
87
12
70
77
05
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Cre
dit A
cce
ss a
nd
Ris
k M
an
ag
em
en
t G
ap
W
hy i
s C
CA
F p
art
icu
larl
y a
pp
licab
le t
o d
evelo
pin
g
co
un
trie
s?
e
as
y t
o u
nd
ers
tan
d
ha
nd
le n
um
be
r is
in
terp
reta
ble
(u
nlik
e c
red
it
sco
res)
an
d f
oste
rs b
orr
ow
er
fin
an
cia
l lite
racy
b
as
ed
on
pro
ve
n l
en
din
g p
rin
cip
les
5
C’s
& c
om
mo
n s
en
se
a
vo
ids
ill-a
dvis
ed
pro
du
ct
ch
oic
es
be
tte
r lo
an
aff
ord
ab
ilit
y
H
ow
can
CC
AF
ad
op
tio
n s
afe
ly e
xp
an
d c
red
it a
cc
es
s?
m
ult
idim
en
sio
na
l fr
am
ew
ork
mo
re e
ffe
cti
ve
ly c
ap
ture
s t
he
bu
sin
es
s
rea
lity
an
d a
vo
ids
ste
reo
typ
ing
ba
se
d o
n in
div
idu
al fa
cto
rs
d
oes n
ot
over-
rely
on
pu
re q
uan
tita
tive m
od
els
an
d c
an
in
tro
du
ce
new
, o
r m
od
ify e
xis
tin
g, c
om
pe
ns
ati
ng
fa
cto
rs o
ve
r ti
me
p
rovid
es
ad
eq
ua
te m
on
ito
rin
g a
nd
co
ntr
ols
to
lim
it r
isk
h
an
dle
po
lic
y c
ap
s c
an
be
en
forc
ed
to
avo
id u
nw
an
ted
co
nc
en
tra
tio
ns
Banking/Financial ServicesSAS Global Forum 2010
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Co
py
rig
ht
© 2
010,
SA
S I
nsti
tute
In
c.
All r
igh
ts r
eserv
ed
. S
AS
an
d a
ll o
ther
SA
S I
nsti
tute
In
c.
pro
du
ct
or
serv
ice n
am
es a
re r
eg
iste
red
tra
dem
ark
s o
r tr
ad
em
ark
s o
f S
AS
In
sti
tute
In
c.
in t
he U
SA
an
d o
ther
co
un
trie
s.
® i
nd
icate
s U
SA
reg
istr
ati
on
.
Clo
sin
g the G
ap B
etw
een C
redit A
ccess a
nd R
isk
Manag
em
ent
cla
rk.a
bra
ha
ms@
sas.c
om
htt
p://b
logs.s
as.c
om
/fa
irle
nd
ing/
(91
9)
53
1-9
31
6 (
Offic
e D
ire
ct L
ine
, S
AS
Wo
rld
HQ
)
Banking/Financial ServicesSAS Global Forum 2010
Top Related