Implementation of Logistic Regression Classification Algorithm and Support Vector Machine for Credit Eligibility Prediction

Abstract

Credit is a provision of money or bills that can be equated with it, the provision of loans or credit. A good credit analysis is very necessary, because it is one of the most important processes in the form of an investigation regarding the smooth or substandard credit repayments. The stages of identifying and predicting customers properly and correctly can be done before the loan process. This is done by examining the historical data of the customer's loan. At this time this activity is an effort made by the banking industry in dealing with credit risk problems. In this research, researchers will apply several data mining classification methods, including Logistic Regression algorithms and Support Vector Machines to predict creditworthiness. The dataset used 481 record motorized vehicle loan data, both problematic and non-problematic. The input variables in this study consisted of thirteen variables, including marital status, number of dependents, age, residence status, home ownership, occupation, employment status, company status, income, down payment, education, length of stay, and housing conditions. From the results of research and testing, the performance of the Logistic Regression model for predicting creditworthiness provided an accuracy rate of 94.81% with an area under the curve (AUC) value of 0.987. While the performance of the Support Vector Machine model provides an accuracy of 94.19% with an area under the curve (AUC) value of 0.978. Based on the T-Test test, the Logistic Regression method has the same performance compared to the Support Vector Machine.