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US 7,280,980 B1Granted
Algorithm for explaining credit scores
AssigneeFair Isaac Corporation
InventorsBruce Hoadley, Larry E. Rosenberger, Andrew Flint
Life of this patent
Estimating the term…
Abstract
An exemplary Web-based score explanation service typically requires only the credit bureau identifier, credit score, and up to four reason codes as input. The invention herein discloses an algorithm that is used to provide an explanation of the primary factors influencing the score, where a rich data feed is provided to the facility implementing the algorithm.
Claims13
A method for explaining credit scores, comprising the steps of providing a Web site that contains informative resources, said Web site comprising any of for-pay services and extranet/Internet functions;
- offering consumers access to information contained in said informative resources, the resources being, both general and personal, about practices comprising any of collection, storing, reporting, and evaluating consumer credit data;
- accepting consumer credit scores and reason codes from individual consumers or third parties, in interactive or batch modes;
- and providing an explanation report to said individual consumers based upon the individual consumers' credit scores, said method for explaining credit scores further comprising the steps of:
- defining a credit score as a function of prediction characteristics;
- defining a surrogate set of characteristics as representing areas for improvement;
- developing a surrogate score to approximate a real credit score, using said real credit score as a performance (dependent) variable and using said surrogate characteristics as predictors;
- and
- defining a potential improvement metric for each area for improvement;
- wherein said developing a surrogate score step further comprises the step of:
- using said areas for improvement prediction variables to develop a surrogate score of the form
- ψ(z1, z2, . . . , zp),
- which is developed using z1, z2, . . . , zp as said prediction characteristics and
- Y=ζ(X1, X2, . . . , Xc)
- as said performance variable;
- and
- wherein said defining a potential improvement metric step is defined as:
- I
- k
- =
-
- 100
- ×
- max
- z
- k
-
- {
- ψ
-
- (
- z
- 1
- *
-
- (
- z
- k
- )
- ,
- …
-
- ,
- z
- k
- ,
- …
-
- ,
- z
- p
- *
-
- (
- z
- k
- )
- )
- -
- ψ
-
- (
- z
- 1
- *
- ,
- …
-
- ,
- z
- k
- *
- ,
- …
-
- ,
- z
- p
- *
- )
- }
- Score
- *
- =
-
- Maximum
-
-
- possible
-
-
- percent
-
-
- improvement
-
-
- in
-
-
- score
-
-
- for
-
-
- Area
-
-
- of
-
- Improvement
-
-
- k
- ,
- where z1*(zk)=z1* unless z1* cannot coexist with zk, wherein in that case, z1*(zk)=E[z1|zk], or some other value of z1 that can coexist with zk.
113 more elements
A credit score explanation system;
- comprising a Web site that contains informative resources, said Web site comprising any of for-pay services and extranet/Internet functions;
- said Web site offering any of consumers and said third parties access to information contained in said informative resources, the resources being both general and personal, about practices of any of collection, storing, reporting, and evaluating consumer credit data;
- a mechanism for accepting consumer credit scores and reason codes from any of individual consumers or third parties, in interactive or batchmodes;
- and providing an explanation report to said individual consumers based upon the individual consumers' credit scores an apparatus for explaining credit scores comprising:
- means for defining a credit score as a function of prediction characteristics;
- means for defining a surrogate set of characteristics as representing areas for improvement;
- means for developing a surrogate score to approximate a real credit score, using said real credit score as a performance (dependent) variable and using said surrogate characteristics as predictors;
- wherein said developing a surrogate score step further comprises:
- using said areas for improvement prediction variables to develop a surrogate score of the form
- ψ(z1, z2, . . . , zp),
- which is developed using z1, z2, . . . , zp as said prediction characteristics and
- Y=ζ(X1, X2, . . . , Xc)
- as said performance variable;
- and
- means for defining a potential improvement metric for each area for improvement;
- wherein said means for defining a potential improvement metric step is defined as:
- I
- k
- =
-
- 100
- ×
- max
- z
- k
-
- {
- ψ
-
- (
- z
- 1
- *
-
- (
- z
- k
- )
- ,
- …
-
- ,
- z
- k
- ,
- …
-
- ,
- z
- p
- *
-
- (
- z
- k
- )
- )
- -
- ψ
-
- (
- z
- 1
- *
- ,
- …
-
- ,
- z
- k
- *
- ,
- …
-
- ,
- z
- p
- *
- )
- }
- Score
- *
- =
-
- Maximum
-
-
- possible
-
-
- percent
-
-
- improvement
-
-
- in
-
-
- score
-
-
- for
-
-
- Area
-
-
- of
-
- Improvement
-
-
- k
- ,
- where z1*(zk)=z1* unless z1* cannot coexist with zk, wherein in that case, z1*(zk)=E[z1|zk], or some other value of z1 that can coexist with zk.
113 more elements
Dependencies are inferred from the claim text.