1)
- By using the insights from big data, banks can learn more about
borrowers with thin credit files—meaning people who haven’t used
enough credit to be judged on just a generic credit score.
- By tapping into big data, lenders can more insights into
borrowers beyond what they learn from credit scores and tax
returns.
- The application of big data through machine learning can help
avoid last-minute delay by red-flagging a data point that might
require further investigation.
2) Mortgage analysis is important because in case a large number
of borrowers are unable to repay their principal and interest then
it will negatively affect the bank/financial institutions and it
may lead to a contagion effect that we saw during the credit and
liquidity crisis of 2008.