Department of Computer Science and Engineering, Aditya University (Surampalem), Kakinada , Andhra Pradesh, India.
* Corresponding Author; Email: vuddagirilakshmijahnavi@gmail.com
ORCID Details
Vuddagiri Lakshmi Jahnavi: https://orcid.org/0009-0002-8705-1654
Vittanala Gnana Sree: https://orcid.org/0009-0000-4719-9350
Gurala Lalithaditya Bulli Sri Amrutha: https://orcid.org/0009-0004-7532-0241
J.Lalu Prasad: https://orcid.org/0009-0001-1760-5335
International Journal of Science and Research Archive, 2026, 21(01), 394–401
Article DOI: 10.30574/ijsra.2026.21.1.1873
Received on 05 September 2026; revised on 11 October 2026; accepted on 13 October 2026
Identifying borrower default is a critical challenge in credit risk management, as inaccurate prediction can lead to financial losses and inefficient lending decisions. This study presents a comparative machine learning approach for loan default prediction using the Home Credit Default Risk dataset, which contains financial, demographic, employment, and credit-related information of loan applicants. Four classification algorithms, namely Logistic Regression, Gradient Boosting, XG Boost and SVM, are evaluated for their ability to classify applicants according to default risk. The proposed methodology involves feature selection, data preprocessing, median imputation for missing numerical values, categorical data handling, stratified data splitting, model training, and performance evaluation. Fourteen predictive variables related to income, credit amount, annuity, employment, demographic characteristics, vehicle ownership, and external credit scores are considered. The study also addresses class imbalance, as the underrepresentation of default cases may make accuracy alone insufficient for evaluating classification performance. Therefore, accuracy, precision, recall, F1-score, confusion matrix, and ROC-AUC are considered for comprehensive model evaluation. The comparative framework analyzes the performance of the selected classification techniques using consistent preprocessing and evaluation criteria. By transforming applicant-related financial and demographic information into predictive risk estimates, the proposed approach provides a systematic framework for loan default assessment. The study demonstrates the applicability of machine learning-based classification techniques to credit risk analysis and provides a structured approach for evaluating potential borrower default risk. The findings can support data-driven credit assessment and assist lending institutions in developing more systematic approaches to loan risk evaluation and decision-making.
Credit Risk, Loan Default Prediction, Machine Learning, Credit Scoring, Class Imbalance, Roc-Auc
Preview Article PDF
Vuddagiri Lakshmi Jahnavi, Vittanala Gnana Sree, Gurala Lalithaditya Bulli Sri Amrutha and J. Lalu Prasad. COMPARATIVE EVALUATION OF CREDIT RISK AND LOAN DEFAULT PREDICTION MODELS BY MACHINE LEARNING. International Journal of Science and Research Archive, 2026, 21(01), 394–401. Article DOI: https://doi.org/10.30574/ijsra.2026.21.1.1873.






