Interview Query

Loan Model

Have you seen this question before?

Let’s say you work for a bank that gives out personal loans. Your co-worker develops a model that takes in customer inputs and returns if a loan should be given or not.

  1. What kind of model did the co-worker develop?
  2. Another co-worker thinks they have developed a better model to predict defaults on the loans. Given that personal loans are monthly installments of payments, how would you measure the difference between the two credit risk models within a timeframe?
  3. What metrics would you track to measure the success of the new model?
Next question: Find the missing number
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