Terminologies in Data

The document defines various fields used in bank loan data and their purposes and uses for banks. It describes fields like loan ID, address state, employment details, loan grades, statuses, payments dates, borrower income and debt ratios that help banks assess risk, verify customers, and manage loan portfolios.

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Terminologies in Data

Uploaded by

Barun Behera

Available Formats

Download as DOCX, PDF, TXT or read online on Scribd

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BANK LOAN REPORT

TERMINOLOGIES USED IN DATA

Fields Used in Data
Loan ID:
Purpose: Loan ID is a unique identifier assigned to each loan application or loan account. It
serves as a primary key for tracking and managing individual loans.
Use for Banks: Banks use Loan IDs to efficiently manage and track loans throughout their
lifecycle. It aids in organizing loan records, monitoring repayments, and addressing customer
inquiries.

Address State:
Purpose: Address State indicates the borrower's location. It helps in assessing regional risk
factors, compliance with state regulations, and estimating default probabilities.
Use for Banks: Banks use this information to identify regional trends in loan demand, adjust
marketing strategies, and manage risk portfolios based on geographic regions.

Employee Length:
Purpose: Employee Length provides insights into the borrower's employment stability.
Longer employment durations may indicate greater job security.
Use for Banks: Banks consider employment length when assessing a borrower's ability to
repay. Stable employment often translates to a lower default risk.

Employee Title:
Purpose: Employee Title specifies the borrower's occupation or job title. It helps lenders
understand the source of the borrower's income.
Use for Banks: Banks use this field to verify income sources, assess the borrower's financial
capacity, and tailor loan offers to different professions.

Grade:
Purpose: Grade represents a risk classification assigned to the loan based on
creditworthiness. Higher grades signify lower risk.
Use for Banks: Banks use the grade to price loans and manage risk. Higher-grade loans
typically receive lower interest rates and are more attractive to investors.

Sub Grade:
Purpose: Sub Grade refines the risk assessment within a grade, providing additional risk
differentiation.
Use for Banks: Sub Grades offer a finer level of risk assessment, helping banks tailor interest
rates and lending terms to match borrower risk profiles.

Home Ownership:
Purpose: Home Ownership indicates the borrower's housing status. It offers insights into
financial stability.
Use for Banks: Banks use this field to assess collateral availability and borrower stability.
Homeowners may have lower default rates.

Issue Date:
Purpose: Issue Date marks the loan's origination date. It's crucial for loan tracking and
maturity calculations.
Use for Banks: Banks use Issue Dates to track loan aging, calculate interest accruals, and
manage loan portfolios.

Last Credit Pull Date:

Purpose: Last Credit Pull Date records when the borrower's credit report was last accessed.
It helps monitor creditworthiness.
Use for Banks: Banks use this date to track credit history updates, assess credit risk, and
make informed lending decisions.

Last Payment Date:

Purpose: Last Payment Date marks the most recent loan payment received. It tracks the
borrower's payment history.
Use for Banks: Banks use this date to assess payment behavior, calculate delinquency, and
project future payments.
Loan Status:
Purpose: Loan Status indicates the current state of the loan (e.g., fully paid, current, default).
It tracks loan performance.
Use for Banks: Banks use Loan Status to monitor loan health, categorize loans for risk
analysis, and determine provisioning requirements.

Next Payment Date:

Purpose: Next Payment Date estimates the date of the next loan payment. It assists in cash
flow forecasting.
Use for Banks: Banks use this date for liquidity planning and to project revenue from loan
portfolios.

Purpose:
Purpose: Purpose specifies the reason for the loan (e.g., debt consolidation, education). It
helps understand borrower intentions.
Use for Banks: Banks use this field to segment and customize loan offerings, aligning loan
terms with borrower needs.

Term:
Purpose: Term defines the duration of the loan in months. It sets the repayment period.
Use for Banks: Banks use the term to structure loan agreements, calculate interest
payments, and manage loan maturities.

Verification Status:
Purpose: Verification Status indicates whether the borrower's financial information has been
verified. It assesses data accuracy.
Use for Banks: Banks use this field to gauge data reliability, verify income, and evaluate loan
application credibility.

Annual Income:
Purpose: Annual Income reflects the borrower's total yearly earnings. It assesses repayment
capacity.
Use for Banks: Banks use this income figure to determine loan eligibility, calculate debt-to-
income ratios, and evaluate creditworthiness.

DTI (Debt-to-Income Ratio):

Purpose: DTI measures the borrower's debt burden relative to income. It gauges the
borrower's capacity to take on additional debt.
Use for Banks: Banks use DTI to assess a borrower's ability to handle loan payments and
make responsible lending decisions.

Instalment:
Purpose: Instalment is the fixed monthly payment amount for loan repayment, including
principal and interest.
Use for Banks: Banks use this field to structure loan terms, calculate amortization schedules,
and assess payment affordability.

Interest Rate:
Purpose: Interest Rate represents the annual cost of borrowing expressed as a percentage. It
determines the loan's cost.
Use for Banks: Banks use interest rates to price loans, manage profit margins, and attract
investors.

Loan Amount:
Purpose: Loan Amount is the total borrowed sum. It defines the principal amount.
Use for Banks: Banks use Loan Amount to determine loan size