Application Analysis of Credit Scoring of Financial Institutions Based on Machine Learning Model

Abstract

Credit score is the basis for financial institutions to make credit decisions. With the development of science and technology, big data technology has penetrated into the financial field, and personal credit investigation has entered a new era. Personal credit evaluation based on big data is one of the hot research topics. This paper mainly completes three works. Firstly, according to the application scenario of credit evaluation of personal credit data, the experimental dataset is cleaned, the discrete data is one‐HOT coded, and the data are standardized. Due to the high dimension of personal credit data, the pdC‐RF algorithm is adopted in this paper to optimize the correlation of data features and reduce the 145‐dimensional data to 22‐dimensional data. On this basis, WOE coding was carried out on the dataset, which was applied to random forest, support vector machine, and logistic regression models, and the performance was compared. It is found that logistic regression is more suitable for the personal credit evaluation model based on Lending Club dataset. Finally, based on the logistic regression model with the best parameters, the user samples are graded and the final score card is output.

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