The University of Edinburgh Business School has launched a model for credit risk analytics, claiming it could enable credit card and mortgage rates to be more tailored to a customer’s exact credit history and behaviour. The Intensity Model’s creators, Professor Jonathan Cook and Dr Mindy Leow, believe it will allow banks to better protect their capital from defaults and give customers higher credit ratings.

The creators believe it is the first model to bring macro-economic considerations together with micro predictors based on previous behaviours, so banks using the model could personalise interest rates to consumers based on more accurate probabilities of late payments or defaults.

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