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Thanks for all the great responses! It looks like different approaches for amortization loans and bullet loans can be useful. 1. Amortization loans PD closes in on 0. What is a good way of avoiding it actually becoming 0? One way could be to check when the last amortization was made instead of compa...

Thank you so much for the response!
Yes the model is for 12m PD.
PD(t) = 1 - [1 - PD12]^t makes a lot of sense until t is close to 0. Is there a common way to avoid PD going to 0 on due date while still using a 12m PD model?

Hi, I'm just a programmer so my understanding of this is not the best. I'm trying to figure out the standard way (if there is one) of calculating ECL when the remaining lifetime is less than 12 months. We can use an example of a 24 month loan and a 12-month PD of 2% in bucket 1. The PD part in the E...

Is there any best practice for calculating PD for the shorter periods?
In the example with 1 day left on a loan calculating like this does not seem realistic:
12-month PD * days / 365