Author Topic: What's This "Best Note" Selection Business Anyway?  (Read 35156 times)

hoggy1

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #75 on: July 23, 2014, 05:50:56 PM »
You beat me to it trevor!
Steve

trevor

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #76 on: July 23, 2014, 05:57:50 PM »


I'll share an added reason I favor CC and debt consolidation loans. If the borrowers actually use the loans for the stated purpose then in general their FICO scores should go up as they trade revolving credit for installment credit and I can monitor whether that happens.


Agreed, although I don't really monitor individual notes. When someone takes out a loan for refinancing they are actually IMPROVING their financial situation. Any other type of loan is simply adding more debt, leading to higher default rates. I don't see any reasons to believe otherwise.

rawraw

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #77 on: July 23, 2014, 06:17:03 PM »


I'll share an added reason I favor CC and debt consolidation loans. If the borrowers actually use the loans for the stated purpose then in general their FICO scores should go up as they trade revolving credit for installment credit and I can monitor whether that happens.


Agreed, although I don't really monitor individual notes. When someone takes out a loan for refinancing they are actually IMPROVING their financial situation. Any other type of loan is simply adding more debt, leading to higher default rates. I don't see any reasons to believe otherwise.
Sounds like a good story, but the data could go either way.  You really have to know more.  You'd rather invest in a 660 FICO refinance note than a 800 FICO addition to house note?  This is why you can't view variables in isolation, variables influence each others important in the formula.

trevor

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #78 on: July 23, 2014, 06:37:56 PM »


I'll share an added reason I favor CC and debt consolidation loans. If the borrowers actually use the loans for the stated purpose then in general their FICO scores should go up as they trade revolving credit for installment credit and I can monitor whether that happens.


Agreed, although I don't really monitor individual notes. When someone takes out a loan for refinancing they are actually IMPROVING their financial situation. Any other type of loan is simply adding more debt, leading to higher default rates. I don't see any reasons to believe otherwise.
Sounds like a good story, but the data could go either way.  You really have to know more.  You'd rather invest in a 660 FICO refinance note than a 800 FICO addition to house note?  This is why you can't view variables in isolation, variables influence each others important in the formula.


You bring up some good points, but you fail to remember one important thing: We can use more than one single filter for our loans, and that is how you can beat the average.

Did you see the years of data I posted on the last page? Or was all of that a fluke? You could even blindly invest in debt/credit refinancing and you would get above average returns, because some loan types are simply better than others.

rawraw

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #79 on: July 24, 2014, 06:55:47 AM »


I'll share an added reason I favor CC and debt consolidation loans. If the borrowers actually use the loans for the stated purpose then in general their FICO scores should go up as they trade revolving credit for installment credit and I can monitor whether that happens.


Agreed, although I don't really monitor individual notes. When someone takes out a loan for refinancing they are actually IMPROVING their financial situation. Any other type of loan is simply adding more debt, leading to higher default rates. I don't see any reasons to believe otherwise.
Sounds like a good story, but the data could go either way.  You really have to know more.  You'd rather invest in a 660 FICO refinance note than a 800 FICO addition to house note?  This is why you can't view variables in isolation, variables influence each others important in the formula.


You bring up some good points, but you fail to remember one important thing: We can use more than one single filter for our loans, and that is how you can beat the average.

Did you see the years of data I posted on the last page? Or was all of that a fluke? You could even blindly invest in debt/credit refinancing and you would get above average returns, because some loan types are simply better than others.
Trevor, I don't mean to insult you but what background do you have in data analysis and/or consumer debt?  Because you seem to cling to those numbers like a safety blanket.  I think I've previously talked to you about data mining in another thread, but you don't seem willing to listen.

And your comment doesn't solve the problem.  Filters are binary (match/disallowed).  That's not how the variables interact with each other as sometimes a criteria should not be disallowed based on other criteria existing.  Assuming FICO perfectly rank orders risk (which it wouldn't in this case, but ignore that), you'd want to assign a better grade to 800 buy a car than a  660 refinance my car.  If you filtered only refinance a car, you'd eliminate the 800 purchase.

hoggy1

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #80 on: July 24, 2014, 10:40:08 AM »
And your comment doesn't solve the problem.  Filters are binary (match/disallowed).  That's not how the variables interact with each other as sometimes a criteria should not be disallowed based on other criteria existing.  Assuming FICO perfectly rank orders risk (which it wouldn't in this case, but ignore that), you'd want to assign a better grade to 800 buy a car than a  660 refinance my car.  If you filtered only refinance a car, you'd eliminate the 800 purchase.

I agree rawraw,
My model uses lots of interactions between parameters and is the primary reason I do not use any of the third-party automated platforms. None, that I know of (Please correct me) permit me to filter on relationship within the data. Here is the simplest possible example: I want the borrowers installment payment to be less than 10% of monthly income AND their DTI < 25% so that I am sure their DTI including this loan will be less than 35%. Although this PTI (payment to income) has been mentioned elsewhere (not my invention) I have not seen any 3rdparty sites that allow me to specify such relationships. I need to be able to specify formulas much like in excel.
Steve

cfb

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #81 on: July 24, 2014, 12:06:37 PM »
20,000 researchers examined thousands of terabytes of data gathered since January of 2009.  In every analysis Obama was president, he was alive, and the stock market went up on an annualized basis.

Researchers concluded that based on the long trend of evidence, Obama would always be president, he would live forever, and as long as he was president the stock market would always go up.  An alternate theory was developed that the rising stock market caused Obama to be president, and also gave him immortality.

rawraw

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #82 on: July 24, 2014, 05:27:18 PM »
Oh, you are good CFB. 

Fred93

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #83 on: July 24, 2014, 06:54:06 PM »
Thank you CFB.

Randawl

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #84 on: July 24, 2014, 10:34:22 PM »
I was in the process of typing something similar.  Changed my mind and saw hours later that rawraw and cfb said it better anyway.     ;)

cfb

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Re: What's This "Best Note" Selection Business Anyway?
« Reply #85 on: July 25, 2014, 03:55:41 PM »
Its an old one I just updated a little.

The other comment that falls to mind during moments of intense data and trend analysis is what Isaac Newton said after losing his shirt in the South Sea bubble.  "I can calculate the movement of the stars, but not the madness of men".