Performance Comparison of Data Mining Algorithm to Predict Approval of Credit Card

Abstract

Credit analysis needs to identify and assess the factors that can affect customers in returning credit. Accurate measurement and good management ability in dealing with credit risk is an effort to save the economic operations unit and be beneficial for a stable and healthy financial system. Data mining prediction techniques are used to determine credit risk. Using the Cross-Industry Standard Process for Data Mining (CRISP-DM) method which consists of several stages, namely Business Understanding (dataset), Data Processing (Feature Selection PCA & Dimension Reduce), Algorithm Models (NN+PSO, SVM, LR), Evaluation (Validation and Accuracy). This study has tested the model using a neural network using the PCA selection feature and optimized with the Particle Swarm Optimize (PSO) algorithm to predict credit card approval. Several experiments were conducted to see the best results. The results of this study prove that the use of a single Neural Network method produces an accuracy of 80.33%. whereas the use of PCA + Neural Network + PSO hybrid method has been proven to increase accuracy to 82.67%. Likewise, the AUC NN value of 0.706 increased to 0.749 when the Neural Network was optimized using PSO and used feature selection. The purpose of this study is to implement and compare Support Vector Machine, Logistic Regression and Neural Network algorithms based on PCA and optimize PSO (Particle Swarm Optimization) to improve accuracy in predictions of credit card approvals.

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