How can you use artificial intelligence to improve credit scores? (2024)

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To increase our credit scores we need to understand that AI systems can continuously monitor borrowers' financial situations and adjust credit scores dynamically based on changing circumstances. This ensures that credit scores remain up-to-date and reflective of the borrower's current financial health.AI uses Natural Language Processing (NLP) algorithms to analyze unstructured data such as text from social media, emails, or other sources. This can help in understanding the sentiment and financial stability of an individual. Thus, AI can help us quickly identify the most critical areas we need to address to improve our credit scores!"Like" if you agree.

In order to ascertain justified and reliable credit scores, predictive models can be developed, tuned, accustomed and improved upon, to include past customer credit service behaviour on a continual basis. These can include various parameters that comply with government regulations, policies of financial institutions, fraud records, etc.

AI has a revolutionary power to transform the way credit decisions are made. The conventional credit assessment process can be complimented with AI based intuitive scoring models to make more accurate predictions.

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AI systems can monitor borrowers' financial situations on a regular basis and adjust credit scores dynamically based on changing circumstances. This ensures that credit scores remain up-to-date and reflective of the borrower's current financial health. :o

This is a very interesting use case of AI wherein people can be proactively given personalized credit behavioral advice about how they can improve own credit scores.

To take this section one step further, “AI can analyze a borrower's spending habits, income, and debt, and provide them with a customized budget, a debt repayment plan, or a savings goal” AND then implement and execute that plan for the individual consumer with agreement from the consumer. Next best action can be leveraged to predict the likelihood of the consumer’s success with following the plan on their own or leveraging AI. Automate reminders and updates on progress on the plan to ensure adherence. If any life events cause deviation, AI can provide guidance on how to deal with those events and get back on track with the plan.

AI is like a sharp-eyed detective. It quickly spots unusual patterns in data that suggest fraud, helping to keep things safe and secure.

Artificial Intelligence (AI) strengthens fraud detection in various ways. It analyzes patterns to spot anomalies, maps networks to unveil fraud rings, evaluates sentiments in content, forecasts user activity based on history, and supercharges rules engines for superior detection. By combining these approaches, AI provides a robust and adaptable defense against fraudulent activities, ensuring a comprehensive and efficient safeguard against potential threats.

India has a large population in the informal sector who actually need credit - however lack of formal documentation prevents them from gaining access to formal methods of credit - they then succumb to loan sharks etc - Self Help groups have been a source of credit scoring of such individuals - can AI help in these areas ? Many fintech companies are trying to bridge this gap and are using unconventional sources of information to assess a person's worthiness

When implementing AI in credit scoring, key considerations include data privacy and security, especially under PSD2. Ethical AI usage is vital, with safeguards against biases, particularly from varied data sources like social networks. Transparency in AI's functioning is crucial for trust, allowing understanding of score calculations. It's important to address AI's potential in perpetuating inequalities, ensuring fair credit assessments. Continuous AI model evolution necessitates regular monitoring and updates to align with new financial behaviors and changing economic conditions.