The credit analysis of projects that are presented on October is performed in-house. We collect quantitative and qualitative information necessary to assess the risk of a project and decide an interest rate. We have 2 types of credit analysis.
Standard projects are analysed using a combination of manual and automatic credit analysis. Our financial analysts are in charge of collecting analysing quantitative and qualitative data. For example, they get information from annual reports and insert it in our scoring model. They would fill the scoring model, automatically or manually, with a lot more information about a company's financial results, market outlook and management team. The scoring model generates a credit score and an interest rate that would be offered.
You can find more information about our standard credit analysis in our dedicated tutorial:
Instant projects are analyzed using fully automatic credit analysis, using an automatic borrower loan eligibility assessment model. We call it "Magpie". Magpie is built using machine learning algorithms on large amounts of data collected by October across different countries. It is constantly improving as we collect more data and apply cross-country learnings. This algorithm has been developed by our Data and Tech teams.
Magpie estimates the probability of payment default (PD) of a company and scores it on a scale going from 1 to 5. A Magpie score of 5 means that the probability of default is very high. Magpie takes credit decisions for Instant projects, that match the following criteria:
- A Magpie score of 1 or 2,
- Covered by a state guarantee,
- With a loan amount between €30,000 and €250,000.
You can find more information on the credit analysis of instant projects in our dedicated tutorial: