Credit Card Approval

Prediction Using ANN

Introduction and Objectives:
In recent years, the credit card industry has seen rapid expansion,
necessitating effective credit risk management systems. Credit card
approval is a crucial step where banks and financial institutions
assess the risk of potential customers. This project’s primary
objective is to develop a robust predictive model to automate the
credit card approval process using machine learning techniques. By
automating this process, institutions can make quicker and more
accurate decisions, potentially minimizing financial risk while
maximizing approval efficiency.

The project specifically aims to analyze customer profiles and

behavior patterns using historical data. We will explore various
features that may influence credit approval decisions, such as
income level, employment type, and family status. Our objective is
to accurately classify applications as approved or denied, thereby
improving decision accuracy and reducing manual effort in the
process.

Given the sensitive nature of credit-related decisions, the project

emphasizes building a model that is not only accurate but also
interpretable. Ensuring that the model can justify its decisions is
essential for both transparency and trustworthiness. We aim to
evaluate several deep learning models, such as Artificial Neural
Networks (ANN) and Recurrent Neural Networks (RNN), to determine
which performs best in accurately predicting outcomes while
remaining practical for real-world applications.

Dataset Processing and Description:

The dataset used in this project includes numerous features
capturing applicant demographics, financial status, and behavioral
characteristics. Key features include `GENDER`, `OWNS_CAR`,
`ANNUAL_INCOME`, `NAME_EDUCATION_TYPE`, and others.
Processing this dataset involves several crucial steps to ensure data
quality and suitability for model training.

Data preprocessing begins with handling missing values, which can

negatively impact model performance. Columns with substantial
missing data are dropped, while others with few missing values are
imputed using appropriate strategies, such as mean or median
imputation for numerical variables and mode imputation for
categorical variables. We then standardize numerical features and

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apply one-hot encoding to categorical features, converting them
into numerical representations suitable for deep learning models.

Feature scaling is also essential, as it improves model convergence

during training. We use standard scaling methods to bring all
numerical features to a similar range, thus enhancing the model's
learning process. After preprocessing, we split the dataset into
training and test sets, with 80% of the data used for training and
20% for testing. This split allows us to train the model on a
substantial portion of the data while retaining a set for evaluating
performance.

Model Description:
For this project, we chose an Artificial Neural Network (ANN) model
due to its ability to capture complex patterns and interactions
among features in high-dimensional datasets. ANNs are particularly
suitable for binary classification tasks, like predicting credit card
approval, where the model needs to learn non-linear decision
boundaries.

The ANN architecture consists of an input layer, multiple hidden

layers, and an output layer. The input layer receives data from
processed features, each representing a particular aspect of the
applicant's profile. Hidden layers consist of interconnected neurons
with activation functions, such as ReLU (Rectified Linear Unit), which
enables the model to learn complex patterns in the data.

The output layer uses a sigmoid activation function, mapping the

output to a probability between 0 and 1. This output represents the
probability of a given application being approved, with a threshold
applied to make the final classification. We also experiment with
regularization techniques, such as dropout, to prevent overfitting,
especially since ANNs are prone to memorizing data rather than
generalizing.

In addition to ANN, we experiment with recurrent neural networks

(RNN) to capture sequential patterns, though RNNs may have
limited applicability in purely tabular data. The final architecture
balances depth and computational efficiency, optimizing model
complexity for best performance.

Model Implementation, Training, and Optimization:

Model implementation involves defining the ANN architecture,
choosing an optimizer, and specifying a loss function. We use the
Keras library in Python for its straightforward implementation of
neural networks. During training, we use the binary cross-entropy
loss function, suitable for binary classification problems, and the

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Adam optimizer, which combines the advantages of momentum and
adaptive learning rates.

Training the model involves iterating through the data in multiple

epochs, adjusting weights to minimize the loss function. To prevent
overfitting, we apply early stopping and monitor validation
accuracy, stopping training if there is no significant improvement
over several epochs. Hyperparameter tuning is also essential; we
experiment with various learning rates, batch sizes, and numbers of
hidden neurons to find the best-performing configuration.

We use cross-validation to validate our model on different subsets of

data, ensuring that our results are generalizable. Finally, we
implement dropout layers to prevent overfitting, allowing the model
to ignore certain neurons randomly during training, which helps in
generalizing better to new data.

Results and Evaluation:

To evaluate model performance, we rely on metrics such as
accuracy, precision, recall, and the F1 score, all of which provide
insights into how well the model distinguishes between approved
and denied applications. The confusion matrix is a valuable tool for
understanding true positive, false positive, true negative, and false
negative rates, providing a complete picture of model performance.

Our model achieves an accuracy of over 85%, indicating a strong

predictive capability. Precision and recall scores are balanced,
reflecting the model’s effectiveness in minimizing both false
approvals and rejections. The F1 score further confirms this balance
by measuring the harmonic mean of precision and recall.

We also evaluate the model using the ROC-AUC (Receiver Operating

Characteristic - Area Under Curve) score, which demonstrates the
model's ability to separate classes effectively. An AUC score above
0.8 indicates that the model is proficient at distinguishing between
approved and denied applications. Further, we conduct an error
analysis to identify cases where the model might struggle, offering
insights into areas for potential improvement.

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Report Writing:
The final report provides a detailed walkthrough of the project,
starting with an introduction to the problem and objectives. We
outline each step, from dataset preprocessing to model selection
and evaluation, offering explanations for each decision made during
the project. This structured approach ensures that readers can
easily follow the methodology and rationale.

The report includes visualizations to support findings, such as

feature distributions, learning curves, and performance metrics.
Charts and tables illustrate the model's accuracy and potential
areas for improvement. Each section is designed to provide clarity,
focusing on the impact of each stage on the final model's
performance.

We also discuss the limitations encountered, such as data

imbalance and computational constraints. These insights are
essential for contextualizing the results and informing future efforts.
The report concludes with a summary of findings, future work
suggestions, and the project’s potential implications for the credit
card approval process.

References:
1. Kaggle Dataset:
https://www.kaggle.com/datasets/rikdifos/credit-card-approval-
prediction
2.ANN Model Optimization and Hyperparameter Tuning:
https://www.tensorflow.org/tutorials/keras/overfit_and_underfit
3. Hyperparameter Tuning with Keras:
https://www.tensorflow.org/tutorials/keras/keras_tuner

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Currency Detection Using CNN
Introduction and Objectives:
Currency detection plays a vital role in various sectors, from
banking to retail, by preventing counterfeit currency circulation and
enhancing transaction accuracy. The objective of this project is to
build a Convolutional Neural Network (CNN) model to automate the
detection of currency type, making the identification process faster
and more accurate. By leveraging CNN's capabilities in recognizing
complex patterns in images, we aim to create a robust model that
can distinguish between real and counterfeit currency or identify the
currency’s denomination.

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In this project, we focus on training a CNN model with a dataset of
currency images, where each image represents a distinct currency
class. The primary goal is to achieve high accuracy in classifying
images into their respective currency classes. By doing so, this
model can be applied in real-world scenarios such as ATMs, vending
machines, or any system requiring automatic currency verification.

The broader objectives include enhancing model generalizability

across different lighting conditions, image qualities, and
orientations. Furthermore, this project explores various image
preprocessing and augmentation techniques to improve model
robustness, ensuring that the model remains effective when
deployed in environments with real-world variability.

Dataset Processing and Description:

The dataset used for this project comprises images of various
currency denominations and types. The data likely includes both
genuine and counterfeit images, or multiple currency
denominations, making classification challenging due to subtle
differences that the model needs to identify.

Data preprocessing is a critical step to ensure high-quality inputs for

the CNN model. First, images are resized to a uniform shape,
typically 64x64 or 128x128 pixels, to standardize input dimensions
for efficient CNN training. Image normalization is then applied,
scaling pixel values to a range of 0-1, which aids in faster model
convergence. Along with that, data augmentation techniques—such
as rotation, flipping, and brightness adjustments—are applied to
simulate real-world variability and increase the effective dataset
size.

The dataset is then split into training, validation, and testing sets to
evaluate model performance. The training set comprises the
majority of data, while the validation set helps tune model
hyperparameters, and the test set evaluates final model accuracy.
Properly handling the dataset through these preprocessing and
splitting methods ensures the model receives diverse and well-
distributed data, improving its generalization ability.

Model Description:
This project utilizes a Convolutional Neural Network (CNN), a deep
learning model designed to recognize spatial hierarchies in images.
CNNs are highly effective for image classification tasks because
they automatically capture relevant features through layers of
convolutional operations, enabling them to recognize complex
patterns, edges, and textures within images.

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The CNN architecture includes several layers: convolutional layers
for feature extraction, pooling layers to reduce spatial dimensions,
and fully connected layers for classification. The convolutional layers
apply multiple filters to identify different aspects of currency
images, such as edges and textures unique to each denomination.
ReLU (Rectified Linear Unit) activation functions are used in these
layers to introduce non-linearity, allowing the network to learn
complex patterns.

Pooling layers, typically MaxPooling, reduce the dimensionality of

feature maps, thereby decreasing computational complexity and
helping the model focus on the most important features. The fully
connected layers at the end of the network serve as a classifier,
mapping learned features to the output classes (currency types or
denominations). A softmax activation function in the output layer
provides probabilities for each class, making it suitable for
multiclass classification.

By stacking multiple convolutional and pooling layers, the CNN can

develop a hierarchical understanding of the currency images,
capturing both low-level and high-level features essential for
accurate classification.

Model Implementation, Training, and Optimization:

The CNN model is implemented using Keras, a Python library well-
suited for building and training deep learning models. Key
components in model implementation include defining the
architecture, selecting the optimizer, and choosing the loss function.
For this classification task, the categorical cross-entropy loss
function is used, as it measures the error in predicting multiclass
outputs, and the Adam optimizer is chosen for its adaptive learning
rate capabilities, which speed up convergence.

The model is trained over multiple epochs, where it iteratively

adjusts weights to minimize the loss function. Each epoch involves
passing the entire training set through the network, calculating the
error, and updating weights to reduce this error. Early stopping is
implemented to prevent overfitting, allowing training to halt when
the model’s performance on the validation set no longer improves.
This ensures that the model does not memorize the training data
but instead generalizes well to new images.

Hyperparameter tuning, such as experimenting with different

learning rates, batch sizes, and filter sizes, is conducted to optimize
model performance. Data augmentation techniques are also applied
during training to improve robustness. The final model is then
evaluated on the test set, where metrics like accuracy and loss
confirm the model’s readiness for deployment.

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Results and Evaluation:
The model’s performance is assessed through accuracy, precision,
recall, and the F1 score, each providing insight into different aspects
of classification success. Accuracy measures the percentage of
correctly classified images, which is a primary indicator of model
effectiveness. Precision and recall scores provide a breakdown of
how well the model distinguishes between classes, helping to
identify any biases or tendencies in predictions. The F1 score
combines precision and recall to give a balanced metric, particularly
useful when dealing with imbalanced classes.

Additionally, a confusion matrix is generated to visualize the

model’s predictions across all classes, revealing any specific classes
the model struggles with. The ROC-AUC score (Receiver Operating
Characteristic - Area Under Curve) further highlights the model’s
ability to distinguish between genuine and counterfeit classes (or
other denominations), with an AUC score closer to 1 indicating high
reliability.

The final results demonstrate that the CNN model achieves strong
classification accuracy, meeting the project’s objective of accurately
distinguishing between currency types. Any misclassifications are
analyzed to understand potential areas for improvement, with
suggestions for increasing training data or refining the model
architecture for enhanced performance.

Report Writing:

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The report documents each stage of the project in detail, from
problem definition to model evaluation. The introduction provides
context and objectives, explaining the significance of automated
currency detection. The data processing section covers dataset
handling, image preprocessing, and augmentation techniques,
highlighting their impact on model accuracy.

Subsequent sections outline the CNN model’s architecture and

rationale, discussing layer choices and configurations that
contribute to successful classification. The implementation and
training section describes the process, including optimization
strategies like early stopping and hyperparameter tuning.
Visualizations of model performance, such as training curves and
confusion matrices, support the evaluation.

The report also includes an analysis of misclassifications and

limitations, offering insights into factors that could affect real-world
performance. Suggestions for future improvements, such as
incorporating more diverse data or exploring different CNN
architectures are provided to guide further work.

References:
1.Understanding Convolutional Neural Networks (CNNs):
https://www.analyticsvidhya.com/blog/2021/05/convolutional-neural-
networks-cnn/)
2. Deep Learning with Python and Keras:
https://www.tensorflow.org/tutorials/images/cnn

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