Social Scoring is a quantitative measure; it is popular stratagem among the lending agencies based in Delhi, Mumbai, Hyderabad, Pune, Kolkata, Jaipur, and Chennai. Used for providing the lenders a brief estimation of future loan performance of a borrower, social score helps a lender in adjusting an interest rate which is convenient for both the sides. In some instances, it puts a lender in a state to refuse a loan application, without making many efforts. However, the risk-based pricing is a viable alternative to credit controlling is possible with the knowledge of Social Scoring. It has some other aspects, too.
1. Social Score increases the loan likeliness in a loan seeker
2. Social Score makes the credit card solicitation possible
3. Social Score helps the lender in taking the decision to provide a loan
4. With this score, a lender can directly market its loan schemes to the potential borrowers
5. Social Score tells a lender how to tailor their products to a target audience
6. A lender can use this score to monitor the credit quality of its borrowers
7. Social Score manipulates useful information to the lender and the credit seeker
8. Social Scoring allows a lender to adjust its interest rate
9. With Social Score, a lender compensate for the risks it acquires
10. Social Score helps the lender in monitoring a loan without any formal meeting with the borrower
The application score is another term which is closely related to the Social Score; it is in fact regarded as the second type of social score. It includes information on the credit and credit seeker beyond that collected by a credit bureau. Most of the times, the social score does not act as a key element between loan approval and loan decline phase. But it assists a lender towards the disbursement phase. In conclusion, we would say that the lending group is responsible for fixing a cut-off score for making clear divisions in between the likely seekers and the less likely ones. It defines an advantage line for the seekers. Eventually, it defines an advantage line for the online lending platforms.