Prediction of Loan Status in Commercial Bank using Machine Learning Classifier

Banking Industry always needs a more accurate predictive modeling system for many issues. Predicting credit defaulters is a difficult task for the banking industry. The loan status is one of the quality indicators of the loan. It doesn't show everything immediately, but it is a first step of the loan lending process. The loan status is used for creating a credit scoring model. The credit scoring model is used for accurate analysis of credit data to find defaulters and valid customers. The objective of this paper is to create a credit scoring model for credit data. Various machine learning techniques are used to develop the financial credit scoring model. In this paper, we propose a machine learning classifier based analysis model for credit data. We use the combination of Min-Max normalization and K-Nearest Neighbor (K-NN) classifier. The objective is implemented using the software package R tool. This proposed model provides the important information with the highest accuracy. It is used to predict the loan status in commercial banks using machine learning classifier.