Relation of Monthly Expenditure on Credit Cards with Delinquency in USA

 Business Understanding
Here, the main objective to study the relationship between the monthly expenditure in credit cards
with delinquency. By delinquency, we mean the customer has failed to make a minimum monthly
payment for the credit card. With this analysis, it can determine whether high expenditure on credit
cards can result delinquency or not. Furthermore, a particular segment (in terms of expenditure) can
be identified where delinquency rate is the highest.
 Analytical Approach
As the problem will define the relationship between two parameters, a descriptive approach is the
most feasible one.
 Data Requirements
To approach the problem in a structured way, we need the record of monthly expenditure,
minimum payment requirement and delinquency records of a customer over the last few years. For
analysis, a cohort of customers selected from all 50 states of USA will be selected.
 Data Collection
Data can be collected from following sources: credit rating agencies, credit card companies, online
payment platforms (example: PayPal) etc.
 Data Understanding
To improve the quality of the data, incomplete and redundant data will be excluded. For example, if
same last name has same zip code in a credit card record in the same time span, it will be excluded.
 Data Preparation
In this stage, data will be tabulated in the form required for the problem. That means, out of the
customer records, the monthly expenditure, monthly payments and delinquency event will be
organized in different columns. Furthermore, data samples in the time when there is emergency
(natural calamity, economic recession etc.) will also be excluded.
 Modelling
Based on the data we have; a regression analysis will be done. Following table shows the
independent and dependent variables:
Independent Variables Dependent Variables
Monthly expenditure
Minimum monthly payments Delinquency occurrence
Year
 Evaluation
The effectiveness of the analysis can be measured by the coefficient of regression (R 2). If the value is
close to 1, the analysis is correct.
 Deployment
The main stakeholder of this analysis is the credit card company. In the deployment stage, detailed
discussion and knowledge sharing will be conducted. It will be done so that they can effectively use
the tool to get an idea how to manage the delinquency occurrence.
 Feedback
From time to time, sample data will be added to maintain the accuracy of the model. Also, if the
stakeholder wants to add more features in the analysis (for example, they want to find out the
expenditure category in a state where delinquency rate is the highest in US), data modeling and
analysis will be modified based on that.