Individual credit evaluation of housing loan based on information entropy theory

Over the past decade, the individual housing loan assets of commercial bank have increased rapidly, and the credit risk resulted from it can't be ignored. The individual ability of returning the loan is always one of the most important factors to cause the credit risk of housing loan. This paper presents a model of evaluating the individual credit based on Information Entropy Theory. In this model, the information provided by the debit borrowers is weighed by entropy value to assess their credibility. Therefore, the conclusion also shows that this model can use limited data to reflect the debit customers' credibility objectively, and can help to reduce the credit risk of housing loan effectively.