Lagged Delinquency
Lagged delinquency is applied in behaviour scoring to ensure a differentiation between already delinquent accounts. This is obtained by measuring the accounts from the last point in which they could have been up to date, e.g., if an account was cycle 2 at the observation point, the starting point for calculating the number of times the account was delinquent over the last 3 months is three months ago.

Lagged Flow Rates
The product of net flows whereby the flows are taken from the same tranche of balances. Thus if the net flow from January to February is used for the current to 1-cycle flow, then the months of February to March will be used for the 1-cycle to 2-cycle flow.

Lagging Indicators
Measurements that indicate the results of actions pursued are considered lagging indicators. The measurement lags behind the activity.

Lamination
The traditional procedure for making plastic cards, using plates on a press to fuse the various layers of PVC sheets together.

LAN
Acronym for Local Area Network, which is a system for linking several PCs into a single system with a File Server PC that keeps a central database. Some databases are located on LANs. Also see Wide Area Network.

Laser Letter
A letter produced on a Laser Printer, which ensures that it is very clean and neat looking. It is also possible to have unlimited personalisation of the text of the letter.

Late Charge
A penalty which is payable in the event of a default in the payment of an instalment. This usually is calculated as a percentage of the payment amount or a minimum total amount.

Late Payment
Borrower makes payments to the lender that is past the due date.

Late Payment Fee
Additional charge imposed on a debtor for not paying on time.

Latency
The time that elapses between a network request and the moment that the request is met.

Laundering
The use of coercion or bribery of a merchant to induce the processing for payment of another merchant's transactions. These transactions are often fraudulent. See Factoring.

Lay-by
A lay-by is when you pay a deposit and agree to pay an amount regularly over a certain period of time.

LCP
Abbreviation for Lost Card Protection. This is a form of assurance, whereby the credit grantor or an associated company insures the customer for the payment of their outstanding debt, in the event that the card is lost or stolen and fraudulent charges are made prior to the cardholder notifying the card issuer to block the account.

Lead
A prospect that has responded to a campaign is called a Lead.

Lead Conversion Rate
The percentage of leads, which become customers.

Lead Tracking
The process of keeping up with what has happened to a lead, (a prospect who has expressed an interest in your product or service). Lead tracking is often very difficult to perform, but is essential for financial and operational forecasting.

Leading Indicators
Measurements that are predictive of what will happen in the future are termed leading indicators.

Lease
A contract by which a company conveys real estate, equipment, or facilities for a specified term and for a specified rent; the act of such conveyance.

Leased Line
A communications medium described as a dedicated telephone line reserved for the permanent use of communicating between two points.

Least Squares
An estimation process that minimises the difference between the predicted results and the actual results.

Leaves
The nodes on the bottom-most branches or the final nodes in a decision tree analysis. Also known as Terminal Nodes.

Legacy System
The older versions of programs that a new program has to be able to work with. For example, Windows 2000 needs to be able to read the files created by Windows 95.

Legal
Recognised or made effective by a court of law.

Lender
A company or person that makes mortgage loans, such as a mortgage banker, credit union, bank, or savings and loan. Your lender's name will appear on your promissory note.

Leptokurtosis
The property of a statistical distribution whereby more occurrences are evident farther away from the mean than would be predicted by a Normal distribution. A credit portfolio loss distribution will typically be leptokurtotic given positive obligor correlations or coarse granularity in the size / number of exposures. This means that a downside confidence interval will be further away from the mean than would be expected given the standard deviation and skewness. See Fat Tails and Kurtosis.

Letter of Credit
An instrument issued by a bank, at the request of an applicant, promising to pay the beneficiary according to the terms and conditions of the credit.

Letter of Demand
An initial document indicating the Plaintiff’s claim and the consequences if the Defendant does not comply with his request.

Letter Shop
An independent company that handles all of the details of printing and mailing letters.

Leveraged Loan
Leverage (or gearing) is using given resources in such a way that the potential positive or negative outcome is magnified. It generally refers to using borrowed funds, or debt, so as to attempt to increase the return on equity.

Liability
A legal obligation or duty, an amount owed.

Liability On An Account
Legal responsibility to repay debt.

Liaison Team
The team of individuals from the organisation that is acquiring a scoring model. The team are responsible for communication between the model supplier and the users.

LIBOR Rate
LIBOR stands for the London Interbank Offered Rate and is an index that is used to set the cost of various variable-rate loans.

Lien
The right to take and hold or sell the property of a debtor as security or payment for a debt.

Lien
A charge upon real or personal property for the satisfaction of some debt or duty ordinarily arising by operation of law. (2) A creditor’s claim on a debtor’s collateral.

Life Cover
In the event of death or permanent disability to the insured person, this cover settles outstanding debts or provides the beneficiary with a fixed payment amount. This enables the bank or executor of the estate to settle any amounts owing.

Life Style Model (LSM)
A descriptive characterisation of the population, based on factors such as residence type, product ownership and aspirations. The valid range is 1 – 8.

Lifecycle
The time between the issue of a smart card and its cancellation or expiration.

Lifestyle
Lifestyle data about a neighbourhood comes from clustering. For example, if a significant number of people in a given cluster have taken a foreign trip, it is assumed that all similar households have done this. It is thus a lifestyle attribute. Included are magazines read, TV programmes watched, etc.

Lifetime Value
The contribution to overheads and profit made by a customer during their total relationship with your company. See LTV and Acquisition Cost.

Lift
The improvement in response from a mailing due to modelling and segmentation. This is calculated by dividing the response from a segment by the overall response, subtracting 1 and multiplying by 100.

Line of Credit (LOC)
A form of personal loan that is revolving and can be used on multiple occasions.

Linear
A straight-line relationship between two variables. The relationship is characterised by a slope and an intercept.

Linear Combination
A method of generating a new variable from other variables by taking the sum of input variables, each multiplied by a constant factor.

Linear Model
An analytical model that assumes linear relationships in variables being studied. Also known as a Scorecard Representation.

Linear Regression
A statistical technique used to find the best-fitting linear relationship between a target (dependent) variable and its predictors (independent variables).

Link
A hyperlink connection that can take you to another document or another part of the same document. On the Internet, links appear as text or pictures that are highlighted. To follow a link, you click the highlighted material. See Hyperlink.

Linux
A freeware version of the UNIX operating system that runs on personal computers and is supported by a dedicated band of programmers on the Internet. Linux is part of the open source movement.

Liquid Document
A document in which the debtor acknowledges his indebtedness in a fixed or determined sum of money.

Liquidated Damages
This is an amount of money, which is agreed upon by the parties or is capable of prompt ascertainment. For example, where nothing more that a simple mathematical calculation must be applied to determine the exact amount of the debt.

Liquidation
The dissolution of a company.

Liquidation Value
The aggregate value of a business if its assets were sold piecemeal.

Liquidator
Person appointed to wind up or liquidate a company or a close corporation.

Liquidity
The ease with which assets can be converted to cash. A large number of buyers and sellers and a high volume of trading activity creates high liquidity.

Liquidity
The degree to which an asset or security can be bought or sold without affecting the asset’s price. Liquidity is characterised by a high level of trading activity. It is the ability to convert an asset to cash quickly.

List
Names and addresses of individuals and/or companies having a common specific interest, characteristic or activity.

List Broker
A specialist who makes all of the necessary arrangements for one company to use the list(s) of another company. A broker's services may include most, or all, of the following: research, selection, recommendation and subsequent evaluation.

List Cleaning
The process of correcting and/or removing a name and/or address from a mailing list, as it is no longer correct. This term is also used in the identification and elimination of house list duplication.

List Maintenance
Keeping a mailing list current through correcting and updating the addresses and other data.

List Rental
The process of renting (for one time use, or other periods) a list of names of customers owned by some other organisation for an agreed upon cost per thousand.

List Test
Part of a list, selected in order to try to determine the effectiveness of the entire list.

Listed Company
A public company with shares listed on a recognised stock exchange.

Loan Agreement
This is typically an agreement between a lender (bank) and a customer (debtor) for a specified loan amount to be repaid over a defined time period. In addition to a repayment schedule, the customer usually also pays interest on the loan amount.

Loan Finance Industry
Finance loan company transactions excluding real estate account types. Terms can reflect either revolving or instalment loans (for example, Avco, HFC, American General, Trans America).

Loan to Value
Abbreviated LTV. The loan to value ratio is the ratio between the size of the loan sought and the value of the asset.

Loan Value
The amount financial institutions will lend on a particular item. For example, lenders will usually lend no more than the blue book value on a used car.

LOC
Abbreviation for Line of Credit. A form of personal loan that is revolving and can be used on multiple occasions.

Local Area Network
This is a system for linking several PCs into a single system with a File Server PC that keeps a central database. Some databases are located on LANs.

Locked In
Investors are said to be locked in when they have profit on a security they own but do not sell because their profit would immediately become subject to the capital gains tax.

Log of the Odds
Used for comparative purposes. This is the logarithm of the good/bad odds used to obtain a straight-line distribution of odds.

Log-Linear Models
Models used to predict the cell frequency of occurrence in a cross-tabulation of independent variables.

Logarithm
A mathematical tool used to transform multiplications into additions.

Logistic Regression
A linear regression that predicts the log odds that a population member falls within a category of an ordered categorical target variable, such as “Good” or “Bad.”

London Stock Exchange
Also known as LSE.

Long Term Debt
The total of all debts payable beyond the next 12 months.

Lorenz Curve
Another name for the Gini-Coefficient. A statistical measure of the efficiency of a scorecard.

Loss Leader
A product sold at a loss to get customers to begin buying.

Lost Call
The caller hangs up before reaching the agent. Also called an Abandoned Call.

Lost Card Protection (LCP)
This is a form of assurance, whereby the credit grantor or an associated company insures the customer for the payment of their outstanding debt, in the event that the card is lost or stolen and fraudulent charges are made prior to the cardholder notifying the card issuer to block the account. See Identity Theft.

Lost or Stolen Indicator
A code utilised within each credit bureau data field that is used to indicate a lost or stolen credit card.

Low Side Overrides
Applications that are accepted, even though the score is below the cut-off.

Lower Cut-off
The score, determined by a credit grantor's management, at or below which applicants may be rejected based on applications score alone. Typically, the score at which applicants cannot obtain enough points from the external credit investigation to reach the cut-off score.

Loyalty
Customer loyalty is measured by retention. A loyal customer is one who keeps buying from you. See Retention Rate.

Loyalty Marketing
A strategic approach to developing programmes intended primarily to establish and maintain a lasting, and profitable relationship between a company and its customers. This often relies on a formalised system of rewards for frequent customers.

Loyalty Points/Frequent Shopper Points
Used as an incentive to encourage repeat purchasing.

Loyalty Programmes
These are rewards that encourage customers to remain as customers longer, or to purchase more.

LSE
London Stock Exchange.

LSM
Abbreviation for Life Style Model. A descriptive characterisation of the population, based on factors such as residence type, product ownership and aspirations.

LTV
Acronym for Lifetime Value, which is the contribution to overheads and profit made by a customer during their total relationship with your company.

Lurk
To read a Usenet newsgroup, mailing list, or chat group without posting any messages. Somebody who lurks is called a lurker.

Lynx
A character-based World Wide Web browser.