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Behavioral Credit Scoring - Default Yearmonth

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Occasional Contributor
Posts: 6

Behavioral Credit Scoring - Default Yearmonth

Hi all,

 

We are developing a behavioral credit scorecard and we are not sure about including the data (Default_Flag = 1) for the same customer for different yearmonths.

 

For example, tihs customer defaults on 201505 and I’m including the same customer to my dataset with default flag =1 for five times.

Is it true or do I have to choose one default_flag =1 observation randomly?

 

 

Customer_ID

Year_Month

Default_Flag

101

201501

0

101

201502

0

101

201503

0

101

201504

0

101

201505

1

101

201506

1

101

201507

1

101

201508

1

101

201509

1

 

 

Any ideas would be appreciated Smiley Happy

 

 

Many thanks,

Onur

Respected Advisor
Posts: 3,065

Re: Behavioral Credit Scoring - Default Yearmonth

It looks like you are tracking a single customer over time. In that case you should flag the first month that they go into default as default_flag = 1 and it should stay like that for all following months until the customer recovers (no longer in default) or the customer's loan is written off as a bad debt and closed. In the latter case you would remove the customer entirely from your data at this point as they would no longer have any lending.

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