Logistic regression for finance (loans and credit cards)

Logistic regression is heavily used and leveraged in financial domains in order to understand and predict whether a particular customer will pay the loan amount on time and also pay their credit card bills on time. This process is called application score cards. In this process, all the demographic details are captured for the customer who has applied for a loan or credit card. Then, the logistic regression model is built on the available past data of existing customers. This model in turn tells us whether the customer who has applied for the loan or credit card will pay their credit card bill or loan installment on time. Majority of the banks leverage the logistic regression structure to answer such business questions.