Albanian Banking Sector Reality and Needing of Using Credit Score in Future to Create a Financial Fitness for Live

Opportunity International's mission is to provide opportunities for people in chronic poverty to transform their lives. Credit scoring measures risk and shed light on the financial implications of the depth of poverty outreach. Managers then take this information, along with their organization's mission and poverty-targeting criteria, and set loan terms and cut-offs that will allow them to have the greatest sustainable impact in their context. Human leadership, not the scorecard, makes the determination to move up-market or target a poorer population. And because scorecards are based on historical information, the attributes of clients served in the past serve as the benchmark for assessing future clients. Scorecards can also signal when a client would be over-indebted by a microfinance loan—protecting members of the poorest population who would have been better off if they had not received the loan. Lenders experience positive net revenue impacts from lending if they increase the classification power of their credit scoring systems. If loan officers' subjective assessments of otherwise intangible borrower characteristics contain additional information about a borrower, a lender may improve the default forecast quality of his internal credit scoring systems by utilizing this subjective information. The Basel II regulatory framework requires lenders to use all available information about a borrower, both subjective and non subjective, but at the same time produce consistent and objectified borrower ratings. However, soft information is often laden with inconsistencies due to the lack of comparability of different raters' assessments and the existence of incentives to manipulate the soft rating