Problem Statement:

Analysis and Evaluation of Credit Score using Machine Learning Models

PBL E-12 Batch

Group ID: 4

Group Members:

24101 - Aarya Parekh

24102 - Diya Agrawal

24104 - Arnav Bhawar

24107 - Krish Bavishi

24123 - Sneha Kodre

1.​ Introduction:

ScoreSavvy, an AI-Based Credit Score Evaluation and Suggestion System is an innovative

project in the financial and banking sector aimed at redefining how credit scores are calculated
and understood. By leveraging advanced machine learning techniques such as FICO and
Random Forest, the system evaluates credit scores based on a comprehensive set of factors,
including loan repayments, credit card usage, guarantor status, payment history, repayment
capability, salary, housing situation, and mortgages. Beyond calculating credit scores, the
system provides actionable suggestions for improvement and highlights benefits linked to the
current credit score. A user-friendly portfolio interface will offer a clear view of financial holdings,
illustrating how each factor influences the credit score and providing tailored recommendations.
Built on a robust backend with an integrated database, this evolving project seeks to empower
individuals to take control of their financial health while ensuring a seamless user experience.

1.1. Problem Statement:

In today's financial landscape, understanding and managing credit scores is crucial for
individuals seeking loans, mortgages, or other financial services. However, traditional credit
scoring systems often lack transparency and fail to provide actionable insights to users about
improving their financial health. Additionally, many users struggle to comprehend how specific
financial behaviors and holdings impact their creditworthiness. This creates a need for an
intelligent, user-centric solution that not only evaluates credit scores but also offers personalized
suggestions for improvement, highlights benefits tied to current scores, and presents financial
data in a clear, interactive format.
This project aims to address these challenges by developing an AI-powered credit score
evaluation and suggestion system. Using advanced machine learning techniques like FICO and
Random Forest, the system will analyze a variety of financial factors—such as repayment
history, credit card usage, guarantor status, income, housing, and mortgages—to calculate
credit scores with precision. It will also offer actionable recommendations, provide benefits
associated with the current score, and deliver a user-friendly portfolio interface to help users
take control of their financial journey.

1.2. Proposed Solution:

To address the challenges of transparency, personalization, and ease of understanding in credit

scoring, this project proposes an AI-Based Credit Score Evaluation and Suggestion System.
The solution is designed to offer a holistic and user-centric approach to credit score
management through the following key features:

●​ Credit Score Calculation:​

Utilize advanced machine learning models, including FICO and Random Forest, to
analyze diverse financial factors such as loan repayment status, credit card usage,
guarantor history, income, payment history, housing situation, and mortgages. These
models ensure accurate and comprehensive credit score evaluations.
●​ Actionable Suggestions for Improvement:​
Generate personalized recommendations to help users improve their credit scores. The
suggestions will address specific areas such as timely repayments, optimal credit
utilization, or diversifying credit sources.
●​ Benefits Analysis:​
Provide insights into the advantages and opportunities tied to the user's current credit
score, such as eligibility for loans, credit cards, or financial incentives.
●​ Interactive Financial Portfolio:​
Develop an intuitive and visually engaging user interface that presents a detailed
portfolio of the user's financial holdings. This portfolio will highlight how each factor
influences the credit score and suggest ways to optimize it.
●​ Backend and Database Integration:​
Build a robust backend to handle the system’s logic and a secure database to manage
user-submitted financial statements and credit-related data efficiently.

The proposed solution empowers users by making credit scoring transparent, actionable, and
easy to understand, ultimately promoting better financial decision-making and creditworthiness.

1.3. Objective:
The primary objective of the AI-Based Credit Score Evaluation and Suggestion System is to
empower individuals with a transparent, accurate, and actionable understanding of their credit
scores. This is achieved by:

●​ Providing Accurate Credit Score Evaluations:​

Leverage advanced machine learning models to analyze financial data comprehensively
and deliver precise credit score calculations.
●​ Offering Personalized Suggestions:​
Identify areas for improvement and provide actionable recommendations to help users
enhance their creditworthiness and financial health.
●​ Enhancing Financial Literacy:​
Educate users on how various financial factors—such as repayment behavior, credit
utilization, and housing status—impact their credit scores.
●​ Creating a User-Friendly Experience:​
Develop an intuitive and interactive interface to present financial portfolios, enabling
users to navigate, analyze, and act on their credit information easily.
●​ Encouraging Proactive Financial Management:​
Motivate users to take charge of their financial decisions by showcasing the benefits tied
to their current credit score and highlighting opportunities for improvement.

The overarching goal is to build a system that simplifies credit score management and fosters
informed financial decision-making for users.

1.3. Scope:

The AI-Based Credit Score Evaluation and Suggestion System has a broad and impactful
scope, addressing both individual and institutional needs in the financial sector. The key aspects
of its scope include:

●​ User-Centric Credit Analysis:

○​ Provide individuals with an in-depth analysis of their credit scores based on
comprehensive financial data.
○​ Empower users with actionable suggestions to improve their creditworthiness.
●​ Advanced Credit Scoring Models:
○​ Integrate machine learning algorithms, such as FICO and Random Forest, to
evaluate credit scores with precision.
○​ Analyze abstract and concrete financial factors, including repayment history,
income, housing status, and loan obligations.
●​ Personalized Financial Recommendations:
○​ Offer tailored advice to users, helping them optimize their financial behavior to
achieve better credit outcomes.
○​ Highlight benefits associated with current credit scores, such as loan or credit
card eligibility.
●​ Interactive Financial Portfolio:
 ○​ Provide a user-friendly interface to present financial data visually, showcasing
how each factor impacts the credit score.
○​ Help users make informed decisions by identifying critical areas for improvement.
●​ Institutional Applications:
○​ Offer insights for financial institutions to assess customer creditworthiness and
customize services, such as loans or credit card offerings, based on credit
scores.
○​ Facilitate informed decision-making for lenders by presenting comprehensive
credit data.
●​ Scalability and Adaptability:
○​ Support expansion to include additional financial data types and predictive
analytics in the future.
○​ Enable adaptation for different financial markets and regulations.

The system’s scope ensures widespread applicability across personal finance management and
institutional credit evaluation, fostering transparency, financial literacy, and improved financial
decision-making.

2. Methodology:

To design and develop the AI-Based Credit Score Evaluation and Suggestion System, the
following methodologies are employed for effective planning, visualization, and implementation.

2.1. ER Model:

Entities:

●​ User:
○​ Represents the individuals using the system.
○​ Each user submits their financial data to get their credit score evaluated.
●​ Financial Data:
○​ Contains the details submitted by users, such as loan payments, credit card
usage, guarantor history, salary, housing situation, and mortgages.
○​ Serves as the primary input for the system.
●​ Credit Score:
○​ The calculated credit score for each user based on their financial data.
○​ It is generated using machine learning models like FICO and Random Forest.
 ●​ Suggestions:
○​ Personalized recommendations provided to users for improving their credit score.
○​ Suggestions are generated based on insights from the credit score analysis.
●​ Portfolio:
○​ A detailed view of the user's financial holdings and how each factor impacts their
credit score.
○​ Helps users understand their financial standing visually.
●​ Benefits:
○​ Highlights the advantages tied to the current credit score, such as loan eligibility,
credit card offers, or financial incentives.

Relationships:

●​ Submits:
○​ Relationship between User and Financial Data.
○​ Indicates that users submit their financial information for credit score analysis.
●​ Calculates:
○​ Relationship between Financial Data and Credit Score.
○​ Shows that the system calculates the credit score based on the submitted
financial data.
●​ Generates:
○​ Relationship between Credit Score and Suggestions.
○​ Represents that suggestions are generated based on the calculated credit score.
●​ Receives:
○​ Relationship between User and outputs like Suggestions, Portfolio, and Benefits.
○​ Demonstrates that users receive actionable insights, a financial portfolio, and
associated benefits from the system.

Connections and Workflow:

●​ The User submits Financial Data to the system.

●​ The system processes this data to calculate the Credit Score.
●​ Based on the Credit Score, the system generates personalized Suggestions, a detailed
Portfolio, and Benefits insights.
●​ Finally, the User receives all the outputs, empowering them to improve their
creditworthiness and make informed financial decisions.

This ER Model ensures a clear visualization of how data flows through the system and how
different entities interact with one another.
2.2. Use Case Diagram:

●​ System Entry Points:

○​ Initial Home interface offering dual access options
○​ Secure Sign-In for existing users
○​ Sign-Up facility for new registrations
●​ Authentication Requirements:
○​ Email ID verification
○​ Password authentication
○​ Portfolio information
○​ Demographic details (DOB, Gender)
●​ Core System Components:
○​ Centralized Home Page serving as the main dashboard
○​ Settings module for account management
○​ Credit Score evaluation section
○​ Features module for financial holdings
●​ Credit Score Module Functionality:
○​ Implementation of FICO scoring system
○​ Random Forest algorithm integration
○​ Personalized evaluation reports
○​ Custom improvement suggestions
○​ Available benefits based on credit standing
●​ Financial Portfolio Management:
○​ Comprehensive portfolio update options
 ○​ Real-time financial status monitoring
○​ Holdings impact assessment
○​ Credit cards and loans tracking
●​ Advanced Features:
○​ Approval management system
○​ Holdings analysis tools
○​ Credit impact assessment
○​ Financial instrument monitoring
●​ Security and User Management:
○​ Secure login/logout functionality
○​ Portfolio data protection
○​ User information management
○​ Access control mechanisms
●​ Analysis and Recommendations:
○​ Credit score calculations
○​ Improvement suggestions
○​ Benefit recommendations
○​ Holdings impact analysis

This structured approach ensures efficient system navigation while providing comprehensive
financial analysis and credit score optimization tools.

2.3. Data Flow Diagram:

The :Dataflow Diagram (DFD) for the AI-Based Credit Score Evaluation and Suggestion System
visually represents how data moves through the system, detailing the interactions between
external entities, processes, data stores, and outputs. Here's a breakdown of its components
and flow:

External Entities:

●​ User:
○​ The primary actor in the system. The user submits their financial data and
receives outputs, such as credit score evaluation, suggestions, benefits, and
portfolio details.
●​ External System:
○​ This represents external sources of data, such as payment history or other
financial data, that the system may rely on for accurate credit score calculation
and assessment.

Processes:

●​ Submit Financial Data:

○​ The user submits their financial information, which is then processed by the
system. This data may include income, loans, credit card usage, and other
financial details.
○​ The data is stored in the Financial Data store.
●​ Calculate Credit Score:
○​ Based on the user's financial data, the system calculates their credit score using
algorithms such as FICO and Random Forest.
○​ The resulting score is stored in the Credit Score store.
●​ Generate Suggestions:
○​ Based on the credit score, the system generates personalized suggestions for
the user on how to improve their score.
○​ These suggestions are stored in the Suggestions store (D3).
●​ Generate Portfolio:
○​ The system creates a visual portfolio showing the user's financial data and how
each factor impacts their credit score. This helps users understand their financial
health.
○​ The portfolio is stored in the Portfolio store (D4).
●​ Calculate Benefits:
○​ Based on the credit score, the system calculates the benefits the user is eligible
for, such as loan eligibility, credit card offers, or other financial services.
○​ The benefits are stored in the Benefits store (D5).

Data Stores:

●​ Financial Data:
○​ Stores the financial data submitted by the user (income, loans, credit card details,
etc.) to calculate the credit score.
●​ Credit Score:
○​ Stores the calculated credit score of the user.
 ●​ Suggestions:
○​ Stores the personalized suggestions generated for the user based on their credit
score.
●​ Portfolio:
○​ Stores the financial portfolio, which provides a detailed view of the user's
financial health and score impact.
●​ Benefits:
○​ Stores the benefits the user is eligible for based on their credit score, such as
loan approvals or credit card offers.

Data Flows:

●​ User → Submit Financial Data → Financial Data

○​ The user submits their financial data, which is stored in the system for further
processing.
●​ Financial Data → Calculate Credit Score → Credit Score
○​ The financial data is processed to calculate the credit score and is then stored in
the Credit Score data store.
●​ Credit Score → Generate Suggestions → Suggestions
○​ The calculated credit score is used to generate suggestions, which are stored for
the user to view.
●​ Credit Score → Generate Portfolio → Portfolio
○​ The credit score is used to generate the user’s portfolio, which is then stored for
display.
●​ Credit Score → Calculate Benefits → Benefits
○​ The credit score is used to calculate the benefits available to the user based on
their current credit score.
●​ External System → Calculate Credit Score
○​ External data, such as payment history, is used in the calculation process.

Outputs:

●​ User → Suggestions, Portfolio, and Benefits

○​ After processing, the user receives the following:
■​ Suggestions to improve their credit score.
■​ Portfolio showing a detailed view of their financial situation and how it
affects their credit score.
■​ Benefits they are eligible for, based on their credit score.

This DFD helps to clarify the entire data processing flow, from user input to the final output,
allowing for clear visibility into how the system operates and ensuring that all components and
processes are captured systematically.

3. Features:
The system offers robust tools for admins to manage users, data, algorithms, and system
performance, ensuring seamless operations and insightful analytics. For users, it provides
personalized credit score evaluations, actionable suggestions, financial portfolio visualization,
and benefit insights through a secure and intuitive interface.​

3.1. For Admins:

●​ User Management:
○​ Add, update, or remove users from the system.
○​ Manage access levels for different users.
●​ Data Management:
○​ View, update, or delete financial data submitted by users.
○​ Monitor the integrity and consistency of stored data.
●​ Credit Score Algorithm Management:
○​ Configure and update the algorithms used (e.g., FICO, Random Forest) for credit
score calculation.
○​ Test and validate scoring models to ensure accuracy and reliability.
●​ Analytics and Reporting:
○​ Generate system-wide reports on credit score trends, user statistics, and system
performance.
○​ Identify anomalies or unusual patterns in user behavior or credit score
calculations.
●​ System Monitoring:
○​ Monitor system performance, including database health and processing times.
○​ Track user activity logs for security and audit purposes.
●​ Feedback Management:
○​ Review user feedback on suggestions and features.
○​ Update system features or algorithms based on feedback and analysis.

3.2. For Users:

●​ Credit Score Evaluation:

○​ Submit financial details to get a calculated credit score.
○​ View a detailed breakdown of how their financial factors contribute to their credit
score.
●​ Personalized Suggestions:
○​ Receive actionable suggestions to improve creditworthiness, such as paying off
specific loans or improving payment history.
●​ Financial Portfolio Visualization:
○​ Access a user-friendly dashboard showcasing their financial holdings.
○​ View how each financial factor impacts their credit score.
●​ Benefit Analysis:
 ○​ Understand the benefits associated with their credit score, such as loan eligibility
or exclusive offers.
○​ Access insights on how an improved credit score could unlock additional
benefits.
●​ Historical Data and Trends:
○​ Track changes in their credit score over time.
○​ Access historical financial data and improvement trends.
●​ User-Friendly Interface:
○​ Navigate through an intuitive UI designed for easy interaction and understanding
of financial insights.
○​ Customize dashboard views based on personal preferences.
●​ Data Security and Privacy:
○​ Trust that all personal and financial data is securely stored and accessible only
by the user.
●​ Feedback and Support:
○​ Provide feedback on system performance or suggestions.
○​ Access support for questions or issues related to the platform.

4. Impact:

The AI-Based Credit Score Evaluation and Suggestion System has a significant impact on both
individual users and the broader financial ecosystem. It empowers users with greater financial
awareness by providing detailed insights into their creditworthiness and the factors influencing
their credit score. This encourages informed decision-making and fosters better financial habits.
Additionally, the system enhances access to financial opportunities by identifying benefits such
as improved loan terms, credit card offers, and other financial products based on the user’s
credit score. By promoting transparency and offering actionable suggestions for improvement,
the system helps users achieve financial stability while also contributing to a more efficient and
inclusive credit evaluation process for financial institutions.

5. Limitations:

The AI-Based Credit Score Evaluation and Suggestion System has certain limitations. It relies
heavily on the accuracy and completeness of the financial data provided by users; incomplete or
incorrect data can result in inaccurate evaluations and suggestions. Additionally, the algorithms
used, such as FICO and Random Forest, may not fully account for unique financial scenarios or
edge cases, potentially leading to biased results. The system's performance is also limited by its
dependence on historical data, which may not reflect future trends or unexpected financial
changes. Furthermore, ensuring data privacy and security is critical, as any breaches could
compromise sensitive user information. Lastly, users with limited financial literacy may face
challenges in interpreting the insights and taking appropriate actions.
 6. Future Scope:

The AI-Based Credit Score Evaluation and Suggestion System holds immense potential for
future development. The system can integrate advanced machine learning models to improve
the accuracy of credit score predictions and offer more personalized financial advice.
Incorporating real-time financial data, such as transaction histories and market trends, can
enhance the system’s responsiveness to dynamic user needs. Expanding the platform to
include multilingual support and user-friendly financial literacy tools can make it accessible to a
broader audience. Additionally, partnerships with financial institutions could enable seamless
loan applications or credit card approvals directly through the platform. Finally, the system can
explore blockchain technology to ensure enhanced data security and transparency, fostering
greater trust among users and institutions.