Default rate of corporate debts and their portfolios - Book review of ‘Credit risk modeling using Excel and VBA’

I read this book since credit risk management of collateral loans is key to manage the performance of CLO tranches. In fact, it may be useful for any structured product’s credit analysis.

Individual level

There are two default prediction methods for individual debt: regression analysis and structured method. Regression analysis uses logistic regression and explanatory variables to predict default probability of a borrower. A credit score can be derived during this process to indicate borrower’s ability to repay the debt.

What side incomes may I own in the future?

Credit Cards

Credit cards are vastly used in US, and they give many benefits to card owners.

Sign-up bonus: It requires card owner to finish a total transaction amount to get this bonus. For example, the Chase Freedom credit card provide a $150 bonus if new card owner spends $500+ in first three months. The equivalent annual return is 120% (150/500 * 4). The zero annual fee makes holding this card no future cost. Similar cards include Chase freedom, Chase freedom unlimited, Discover, American Express Blue cash, etc.