Ratio & Interaction Features: Loan-to-Income, DTI and LTI × Self-Employed
This lesson is part of the course
In this lesson
You build two ratio features and one interaction feature from the raw columns and show with CORREL that the ratios track default far better than the raw loan amount.
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Lessons in this course
- Missing Values: Data Types, Missing Flags & Mean, Median and Group Imputation Locked
- Encoding Categories: One-Hot Dummies, Count Encoding & Ordinal Ranks Locked
- Scaling: Min-Max, z-Score & Robust Scaling with Quartiles Locked
- Binning & Quantile Buckets: Tenure Bands, Income Quartiles & Default Rates (with a Chart) Locked
- Log Transforms & Outlier Capping (Winsorising at the 5th/95th Percentile) Locked
- Ratio & Interaction Features: Loan-to-Income, DTI and LTI × Self-Employed Locked
- Target Encoding with Smoothing & Why Leakage Happens (Train/Test Split) Locked
- Feature Importance Screen: Correlation with the Target & a Univariate AUC (with a Chart) Locked