Exploring counterfactual scenarios for credit risk prediction
As evident from the data, many applicants are deemed a credit risk (indicated by 1 as the last value), leading to loan disapproval. For such applicants, the following question arises: Is there any action they can take to change this decision and be considered creditworthy (indicated by 0 as the outcome)? By action, we mean changing the status of one or more of their attributes, such as the amount they are requesting to borrow.
Upon inspecting the dataset, some attributes are challenging or even impossible for an applicant to change, such as employment duration, number of dependents, or current housing. For our examples, we will focus on the following four attributes, all of which offer some flexibility:
amount: The amount of the requested loanduration: The duration of the requested loan in monthschecking: The status of the applicant’s checking accountsavings: The status of the applicant&...
