Loan Default Models

Loan default models are analytical tools used by lenders to predict the likelihood that a borrower will fail to repay a loan. These models assess various factors, such as the borrower’s credit history, income, and financial behavior, to gauge risk. By analyzing this data, lenders can make informed decisions about approving loans, determining interest rates, and managing risk. Essentially, loan default models help financial institutions estimate the probability of default, enabling them to protect their investments and maintain financial stability.