Fraud and Credit Risk
While fraud and credit risk are two distinct factors that can be intellectually distinguished with ease, measuring the difference in practice can be tricky. That’s due, in part, to the fact that both have overlapping risk in common.
When a loan reaches first payment default, at what point does a lender determine that the consumer has no intent to pay? Determining intent from risk isn’t easy, especially for lenders using data from their own portfolio exclusively. Data yielding an industry-wide perspective, however, reliably contextualizes behavior and various risk factors for vastly improved decisioning.
The ability to accurately gauge the difference between credit risk and fraud remains crucial to lenders.
While credit risk measures ability to pay and assumes a likelihood of repayment, fraud precludes repayment, much less earning a profit. Fraud, which is now estimated to cost businesses trillions of dollars worldwide, should be avoided whenever possible.
To learn more on how to distinguish between risk types, download, “How Lenders Can Identify Risk in the ‘Big Fraud’ Era.”
This new spotlight on fraud contains:
- How fraud disproportionately affects lenders
- The different types of fraud that lenders encounter
- The current fraud landscape, and more