What is liwwa’s risk grading system?
liwwa’s credit grading system is an alphabetic grading that assigns each loan a letter score ranging from A to D corresponding to the expected level of risk. To determine this grade, we use various analytics combining historical data and industry expertise while factoring in various variables. Upon concluding the assessment, loans are assigned credit scores ranging from 0 – 10, which are translated into risk level grades as illustrated below:
How is it calculated?
liwwa’s credit grading system is based on a survival model, more precisely a Cox Proportional Hazard Model. The model estimates the survival probability of the loan, using the available data on three dimensions: the borrower’s profile, the business’ profile, and the business’ financial position. The model estimates the survival probability of the loan, using the dimension’s available data at each stage of the repayment schedule, to ultimately assign it a credit score which is translated into risk level grades (A to D).
The following visual illustrates the credit assessment process:
The liwwa risk grading rating is not a measure of the quality of the investment and is not meant to replace individual due diligence. The information provided on any loan should not be interpreted as a warranty, or a promise of future performance. Further, historical data used to refine risk ratings is not necessarily indicative of future performance. Ratings are for informational purposes only. Ratings are not individualized for any specific investor’s financial situation and should not be considered investment advice. Furthermore, these ratings are not intended to be predictions of how any particular investment will perform. Each investor should carefully consider investments in any loan and be comfortable with his/her understanding of the investment.