What is the Behavior Score?

Being able to predict a customer's consumption behavior is an extremely important tool in the business world. That's why we want to explain more about how the Behavior Score works and how it can benefit your company.

Unlike the traditional credit score, which we know as the Credit Score, the Behavior Score is a score that indicates more than just a look at the banking history of an individual or company; it is a broader view of the attributes that this client brings to the negotiating table.

Traditionally, it is calculated using mathematical algorithms based on a customer's credit history, demographics and financial circumstances. Lenders and other organizations use this information to assess the applicant's potential risk of default, using the score to mitigate their likelihood of losses arising from debts that are not possible to collect.

When the Behavior Score is used, you can identify a customer's creditworthiness by evaluating their previous financial transactions with your company. In this way, you can assess whether there is a possibility of increasing the customer's credit or protecting your company from default.

Which is better for your company, Behavior Score or Credit Score?

Nowadays, the traditional credit score is often not enough to come up with a credit policy that encompasses all the factors that guarantee your company's financial security. Even the Behavior Score, which already carries out a more in-depth analysis of the customer's consumption behavior, is already being expanded. The ideal is to combine both internal and external data to arrive at a score that is as fair and accurate as possible.

There are a number of resources that can be used to track a customer's spending patterns, whether they are an individual or a company. In the case of individuals, many start-ups are using social media data to determine their customers' creditworthiness. In the case of legal entities, the information provided by traditional credit bureaus can offer important insights. 

By combining public and social data, it is possible to create a powerful behavioral credit profile using machine learning to identify and predict trends. This can help determine high-risk loan accounts early on and come up with relevant measures, such as offering debt restructuring mechanisms to these customers.

At 4KST, we use, for example, data such as order history over the last few days, punctuality and delays in payments, number of installments to be paid and average delays. Once the predictive model has been built, the data is duly disposed of (4KST does not store customer data), in full compliance with the LGPD. 

Secure data search

Although there are several sources of data that help determine a customer's Behavior Score, including social networks, it must be remembered that this mining must be done in accordance with the new General Data Protection Law, the LGPD.

The LGPD was created to protect citizens' privacy and regulate the use of personal data by companies, both online and offline. The main aim of the new law is to ensure that this data is not unduly exploited.

Since September 2020, when the law came into force, any citizen will be able to question private companies or public bodies about how their personal information and data is processed, such as: CPF, full name, telephone and address, etc. 

In addition to protecting citizens, the law also regulates the transparency of information and free access by some companies to guarantee and safeguard the responsibility and accountability of individuals.

Visit our blog to find out more about the LGPD. Also understand the process of data mining, also known as data stream mining. On the 4KST blogblog, you can find other articles on topics such as credit, financial organization and technology.

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