Approval Rate Decomposition Report

This report is designed to explain why you have experienced a change in approval rate. The change in approval rate is measured by subtracting the previous approval rate from the current one, expressed as a percentage. It shows the contributing factors to the percent of change and associates a value with each.

This report allocates the percentage of change to two causes. The first is a change in the distribution of risk. For example, if an organization receives a larger share of high-risk applications, they would expect the total approval rate to decline. The second is the approval rate within a score band. This may be caused by company policies that affect approval, such as policies on loan to value, verification, or the value of collateral.

The other performance indicator included in this report is the override rate. There is no decomposition of override rate, but this data appears on the report because it is one of the most likely and most often-questioned causes of a change in approval rate other than change in risk distribution. For any segment with an increase or decrease in approval rate, a change in the override rate is a likely cause and one that is usually significant from a policy and compliance perspective.

In summary, the Approval Rate Decomposition Report uncovers the contributing factors to a change in any approval rate. It requires the recording of rate and a distribution for at least two segments from one period to the next. For the report to be meaningful, these segments must be defined in the same way for both periods.

To generate the Approval Rate Decomposition Report, specify the from and to date ranges and score interval.