Fashion
A trial credit scoring model that encompasses the national citizen database has proven useful for lenders as it reduces lending risks by up to 20%.
The model, which is built on the standards of global credit scoring company FICO, is now almost complete with 18 citizen data fields, Vu Van Tan, deputy head of the citizen administration unit under the Ministry of Public Security, said at a meeting on August 7.
The model was tested by MB’s consumer loan unit MCredit on 10,000 data fields, PVcombank with 20,000 fields, and fintech firm Datanest with 60,000 fields.
These companies saw their credit risks reduced by 7-20%.
“After the trial, these companies all want to encompass the model in their operations officially,” Tan said.
Banks and the Ministry of Public Security have long been working together to authenticate and synchronize the personal ID and credit information of over 40 million bank customers.
The partnership also helped banks to launch money withdrawal services using ID cards at ATM. Bank customers can also use their electronic ID account to confirm identity.
But as this partnership had its limitations in building an effective credit scoring system, the Ministry of Public Security has collaborated with the Hanoi University of Science and Technology to build the trial model using FICO standards.
Deputy governor of the State Bank of Vietnam Pham Tien Dung said that credit scoring in Vietnam is gaining popularity among banks as it helps them to predict the probability of getting their money back from a borrower, and this only works with a precise database.
A representative of state-owned lender BIDV said that the authentication of a third-party organization, especially a state-owned entity, plays an important role in credit scoring, ensuring that the data bank employees have collected is precise.
