- Nikhil Adithyan

# Credit Card Fraud Detection with Machine Learning in Python

Updated: Apr 19

**Using XGBoost, Random forest, KNN, Logistic regression, SVM, and Decision tree to solve classification problems**

**Case**

Assume that you are employed to help a credit card company to detect potential fraud cases so that the customers are ensured that they won’t be charged for the items they did not purchase. You are given a dataset containing the transactions between people, the information that they are fraud or not, and you are asked to differentiate between them. This is the case we are going to deal with. Our ultimate intent is to tackle this situation by building classification models to classify and distinguish fraud transactions.

Why Classification? Classification is the process of predicting discrete variables (binary, Yes/no, etc.). Given the case, it will be more optimistic to deploy a classification model rather than any others.

**Steps Involved**

Importing the required packages into our python environment.

Importing the data and Exploratory Data Analysis (EDA)

Feature Selection and Data Split

Building six types of classification models

Evaluating the created classification models using the evaluation metrics

We are using python for this project because it is really effortless to make use of a bunch of methods, has an extensive amount of packages for machine learning, and can be learned easily. In recent days, the job market for python is seamlessly higher than any other programming language and companies like Netflix are using python for data science and many other applications. With that, let’s dive into the coding part.

**Importing the Packages**

For this project, our primary packages are going to be Pandas to work with data, NumPy to work with arrays, scikit-learn for data split, building and evaluating the classification models, and finally the xgboost package for the xgboost classifier model algorithm. Let’s import all of our primary packages into our python environment.

**Python Implementation:**

```
# IMPORTING PACKAGES
import pandas as pd # data processing
import numpy as np # working with arrays
import matplotlib.pyplot as plt # visualization
from termcolor import colored as cl # text customization
import itertools # advanced tools
from sklearn.model_selection import train_test_split # data split
from sklearn.tree import DecisionTreeClassifier # Decision tree
from sklearn.neighbors import KNeighborsClassifier # KNN
from sklearn.linear_model import LogisticRegression # Logistic regr
from sklearn.svm import SVC # Support Vector Machine algorithm
from sklearn.ensemble import RandomForestClassifier # Random forest
from xgboost import XGBClassifier # XGBoost algorithm
from sklearn.metrics import confusion_matrix # evaluation metric
from sklearn.metrics import accuracy_score # evaluation metric
from sklearn.metrics import f1_score # evaluation metric
```

**Importing Data & EDA**

**About the data: **The data we are going to use is the Kaggle Credit Card Fraud Detection dataset (__click here for the dataset__). It contains features V1 to V28 which are the principal components obtained by PCA. We are going to neglect the time feature which is of no use to build the models. The remaining features are the ‘Amount’ feature that contains the total amount of money being transacted and the ‘Class’ feature that contains whether the transaction is a fraud case or not.

Now let’s import the data using the ‘read_csv’ method and print the data to have a look at it in python.

**Python Implementation:**

```
# IMPORTING DATA
df = pd.read_csv('creditcard.csv')
df.drop('Time', axis = 1, inplace = True)
print(cl(df.head(), attrs = ['bold']))
```

Output:

In the next process, we are going to do some data processing and Exploratory Data Analysis (EDA).

**Data Processing and EDA**

Let’s have a look at how many fraud cases and non-fraud cases are there in our dataset. Along with that, let’s also compute the percentage of fraud cases in the overall recorded transactions. Let’s do it in python!

**Python Implementation:**

```
cases = len(df)
nonfraud_count = len(df[df.Class == 0])
fraud_count = len(df[df.Class == 1])
fraud_percentage = round(fraud_count/nonfraud_count*100, 2)
print(cl('CASE COUNT', attrs = ['bold']))
print(cl('--------------------------------------------', attrs = ['bold']))
print(cl('Total number of cases are {}'.format(cases), attrs = ['bold']))
print(cl('Number of Non-fraud cases are {}'.format(nonfraud_count), attrs = ['bold']))
print(cl('Number of Non-fraud cases are {}'.format(fraud_count), attrs = ['bold']))
print(cl('Percentage of fraud cases is {}'.format(fraud_percentage), attrs = ['bold']))
print(cl('--------------------------------------------', attrs = ['bold']))
```

Output:

We can see that out of 284,807 samples, there are only 492 fraud cases which is only 0.17 percent of the total samples. So, we can say that the data we are dealing with is highly imbalanced data and needs to be handled carefully when modeling and evaluating.

Next, we are going to get a statistical view of both fraud and non-fraud transaction amount data using the ‘describe’ method in python.

**Python Implementation:**

```
nonfraud_cases = df[df.Class == 0]
fraud_cases = df[df.Class == 1]
print(cl('CASE AMOUNT STATISTICS', attrs = ['bold']))
print(cl('--------------------------------------------', attrs = ['bold']))
print(cl('NON-FRAUD CASE AMOUNT STATS', attrs = ['bold']))
print(nonfraud_cases.Amount.describe())
print(cl('--------------------------------------------', attrs = ['bold']))
print(cl('FRAUD CASE AMOUNT STATS', attrs = ['bold']))
print(fraud_cases.Amount.describe())
print(cl('--------------------------------------------', attrs = ['bold']))
```

Output:

While seeing the statistics, it is seen that the values in the ‘Amount’ variable are varying enormously when compared to the rest of the variables. To reduce its wide range of values, we can normalize it using the ‘StandardScaler’ method in python.

**Python Implementation:**

```
sc = StandardScaler()
amount = df['Amount'].values
df['Amount'] = sc.fit_transform(amount.reshape(-1, 1))
print(cl(df['Amount'].head(10), attrs = ['bold']))
```

Output:

**Feature Selection & Data Split**

In this process, we are going to define the independent (X) and the dependent variables (Y). Using the defined variables, we will split the data into a training set and testing set which is further used for modeling and evaluating. We can split the data easily using the ‘train_test_split’ algorithm in python.

**Python Implementation:**

```
# DATA SPLIT
X = df.drop('Class', axis = 1).values
y = df['Class'].values
X_train, X_test, y_train, y_test = train_test_split(X, y, test_size = 0.2, random_state = 0)
print(cl('X_train samples : ', attrs = ['bold']), X_train[:1])
print(cl('X_test samples : ', attrs = ['bold']), X_test[0:1])
print(cl('y_train samples : ', attrs = ['bold']), y_train[0:20])
print(cl('y_test samples : ', attrs = ['bold']), y_test[0:20])
```

Output:

Now that we have all the required components to build our classification models. So let’s proceed to it.

**Modeling**

In this step, we will be building six different types of classification models namely Decision Tree, K-Nearest Neighbors (KNN), Logistic Regression, Support Vector Machine (SVM), Random Forest, and XGBoost. Even though there are many more models which we can use, these are the most popular models used for solving classification problems. All these models can be built feasibly using the algorithms provided by the scikit-learn package. Only for the XGBoost model, we are going to use the xgboost package. Let’s implement these models in python!

**Python Implementation:**

```
# MODELING
# 1. Decision Tree
tree_model = DecisionTreeClassifier(max_depth = 4, criterion = 'entropy')
tree_model.fit(X_train, y_train)
tree_yhat = tree_model.predict(X_test)
# 2. K-Nearest Neighbors
n = 5
knn = KNeighborsClassifier(n_neighbors = n)
knn.fit(X_train, y_train)
knn_yhat = knn.predict(X_test)
# 3. Logistic Regression
lr = LogisticRegression()
lr.fit(X_train, y_train)
lr_yhat = lr.predict(X_test)
# 4. SVM
svm = SVC()
svm.fit(X_train, y_train)
svm_yhat = svm.predict(X_test)
# 5. Random Forest Tree
rf = RandomForestClassifier(max_depth = 4)
rf.fit(X_train, y_train)
rf_yhat = rf.predict(X_test)
# 6. XGBoost
xgb = XGBClassifier(max_depth = 4)
xgb.fit(X_train, y_train)
xgb_yhat = xgb.predict(X_test)
```

In the above code, we have built six different types of classification models starting from the Decision tree model to the XGBoost model. Now let’s breakdown the code.

Starting with the decision tree, we have used the ‘DecisionTreeClassifier’ algorithm to build the model. Inside the algorithm, we have mentioned the ‘max_depth’ to be ‘4’ which means we are allowing the tree to split four times and the ‘criterion’ to be ‘entropy’ which is most similar to the ‘max_depth’ but determines when to stop splitting the tree. Finally, we have fitted and stored the predicted values into the ‘tree_yhat’ variable.

Next is the K-Nearest Neighbors (KNN). We have built the model using the ‘KNeighborsClassifier’ algorithm and mentioned the ‘n_neighbors’ to be ‘5’. The value of the ‘n_neighbors’ is randomly selected but can be chosen optimistically through iterating a range of values.

There is nothing much to explain about the code for Logistic regression as we kept the model in a way more simplistic manner by using the ‘LogisticRegression’ algorithm and as usual, fitted and stored the predicted variables in the ‘lr_yhat’ variable.

We built the Support Vector Machine model using the ‘SVC’ algorithm and we didn’t mention anything inside the algorithm as we managed to use the default kernel which is the ‘rbf’ kernel. After that, we stored the predicted values into the ‘svm_yhat’ after fitting the model.

The next model is the Random forest model which we built using the ‘RandomForestClassifier’ algorithm and we mentioned the ‘max_depth’ to be 4 just like how we did to build the decision tree model. Finally, fitting and storing the values into the ‘rf_yhat’. Remember that the main difference between the decision tree and the random forest is that, decision tree uses the entire dataset to construct a single model whereas, the random forest uses randomly selected features to construct multiple models. That’s the reason why the random forest model is used versus a decision tree.

Our final model is the XGBoost model. We built the model using the ‘XGBClassifier’ algorithm provided by the xgboost package. We mentioned the ‘max_depth’ to be 4 and finally, fitted and stored the predicted values into the ‘xgb_yhat’.

With that, we have successfully built our six types of classification models and interpreted the code for easy understanding. Our next step is to evaluate each of the models and find which is the most suitable one for our case.

**Evaluation**

As I said before, in this process we are going to evaluate our built models using the evaluation metrics provided by the scikit-learn package. Our main objective in this process is to find the best model for our given case. The evaluation metrics we are going to use are the accuracy score metric, f1 score metric, and finally the confusion matrix.

**1. Accuracy score**

Accuracy score is one of the most basic evaluation metrics which is widely used to evaluate classification models. The accuracy score is calculated simply by dividing the number of correct predictions made by the model by the total number of predictions made by the model (can be multiplied by 100 to transform the result into a percentage). It can generally be expressed as:

**Accuracy score = No.of correct predictions / Total no.of predictions**

Let’s check the accuracy score of the six different classification models we built. To do it in python, we can use the ‘accuracy_score’ method provided by the scikit-learn package.

**Python Implementation:**

```
# 1. Accuracy score
print(cl('ACCURACY SCORE', attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the Decision Tree model is {}'.format(accuracy_score(y_test, tree_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the KNN model is {}'.format(accuracy_score(y_test, knn_yhat)), attrs = ['bold'], color = 'green'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the Logistic Regression model is {}'.format(accuracy_score(y_test, lr_yhat)), attrs = ['bold'], color = 'red'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the SVM model is {}'.format(accuracy_score(y_test, svm_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the Random Forest Tree model is {}'.format(accuracy_score(y_test, rf_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the XGBoost model is {}'.format(accuracy_score(y_test, xgb_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
```

Output:

According to the accuracy score evaluation metric, the KNN model reveals to be the most accurate model and the Logistic regression model to be the least accurate model. However, when we round up the results of each model, it shows 0.99 (99% accurate) which is a very good score.

**2. F1 Score**

The F1 score or F-score is one of the most popular evaluation metrics used for evaluating classification models. It can be simply defined as the harmonic mean of the model’s precision and recall. It is calculated by dividing the product of the model’s precision and recall by the value obtained on adding the model’s precision and recall and finally multiplying the result with 2. It can be expressed as:

**F1 score = 2( (precision * recall) / (precision + recall) )**

The F1 score can be calculated easily in python using the ‘f1_score’ method provided by the scikit-learn package.

**Python Implementation:**

```
# 2. F1 score
print(cl('F1 SCORE', attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the Decision Tree model is {}'.format(f1_score(y_test, tree_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the KNN model is {}'.format(f1_score(y_test, knn_yhat)), attrs = ['bold'], color = 'green'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the Logistic Regression model is {}'.format(f1_score(y_test, lr_yhat)), attrs = ['bold'], color = 'red'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the SVM model is {}'.format(f1_score(y_test, svm_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the Random Forest Tree model is {}'.format(f1_score(y_test, rf_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the XGBoost model is {}'.format(f1_score(y_test, xgb_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
```

Output:

The ranking of the models is almost similar to the previous evaluation metric. On basis of the F1 score evaluation metric, the KNN model snatches the first place again and the Logistic regression model remains to be the least accurate model.

**3. Confusion Matrix**

Typically, a confusion matrix is a visualization of a classification model that shows how well the model has predicted the outcomes when compared to the original ones. Usually, the predicted outcomes are stored in a variable that is then converted into a correlation table. Using the correlation table, the confusion matrix is plotted in the form of a heatmap. Even though there are several built-in methods to visualize a confusion matrix, we are going to define and visualize it from scratch for better understanding. Let’s do it in python!

**Python Implementation:**

```
# 3. Confusion Matrix
# defining the plot function
def plot_confusion_matrix(cm, classes, title, normalize = False, cmap = plt.cm.Blues):
title = 'Confusion Matrix of {}'.format(title)
if normalize:
cm = cm.astype(float) / cm.sum(axis=1)[:, np.newaxis]
plt.imshow(cm, interpolation = 'nearest', cmap = cmap)
plt.title(title)
plt.colorbar()
tick_marks = np.arange(len(classes))
plt.xticks(tick_marks, classes, rotation = 45)
plt.yticks(tick_marks, classes)
fmt = '.2f' if normalize else 'd'
thresh = cm.max() / 2.
for i, j in itertools.product(range(cm.shape[0]), range(cm.shape[1])):
plt.text(j, i, format(cm[i, j], fmt),
horizontalalignment = 'center',
color = 'white' if cm[i, j] > thresh else 'black')
plt.tight_layout()
plt.ylabel('True label')
plt.xlabel('Predicted label')
# Compute confusion matrix for the models
tree_matrix = confusion_matrix(y_test, tree_yhat, labels = [0, 1])
knn_matrix = confusion_matrix(y_test, knn_yhat, labels = [0, 1])
lr_matrix = confusion_matrix(y_test, lr_yhat, labels = [0, 1])
svm_matrix = confusion_matrix(y_test, svm_yhat, labels = [0, 1])
rf_matrix = confusion_matrix(y_test, rf_yhat, labels = [0, 1])
xgb_matrix = confusion_matrix(y_test, xgb_yhat, labels = [0, 1])
# Plot the confusion matrix
plt.rcParams['figure.figsize'] = (6, 6)
# 1. Decision tree
tree_cm_plot = plot_confusion_matrix(tree_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'Decision Tree')
plt.savefig('tree_cm_plot.png')
plt.show()
# 2. K-Nearest Neighbors
knn_cm_plot = plot_confusion_matrix(knn_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'KNN')
plt.savefig('knn_cm_plot.png')
plt.show()
# 3. Logistic regression
lr_cm_plot = plot_confusion_matrix(lr_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'Logistic Regression')
plt.savefig('lr_cm_plot.png')
plt.show()
# 4. Support Vector Machine
svm_cm_plot = plot_confusion_matrix(svm_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'SVM')
plt.savefig('svm_cm_plot.png')
plt.show()
# 5. Random forest tree
rf_cm_plot = plot_confusion_matrix(rf_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'Random Forest Tree')
plt.savefig('rf_cm_plot.png')
plt.show()
# 6. XGBoost
xgb_cm_plot = plot_confusion_matrix(xgb_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'XGBoost')
plt.savefig('xgb_cm_plot.png')
plt.show()
```

Output:

**Understanding the confusion matrix: **Let’s take the confusion matrix of the XGBoost model as an example. Look at the first row. The first row is for transactions whose actual fraud value in the test set is 0. As you can calculate, the fraud value of 56861 of them is 0. And out of these 56861 non-fraud transactions, the classifier correctly predicted 56854 of them as 0 and 7 of them as 1. It means, for 56854 non-fraud transactions, the actual churn value was 0in the test set, and the classifier also correctly predicted those as 0. We can say that our model has classified the non-fraud transactions pretty well.

Let’s look at the second row. It looks like there were 101 transactions whose fraud value was 1. The classifier correctly predicted 79 of them as 1, and 22 of them wrongly as 0. The wrongly predicted values can be considered as the error of the model.

Like this, while comparing the confusion matrix of all the models, it can be seen that the K-Nearest Neighbors model has performed a very good job of classifying the fraud transactions from the non-fraud transactions followed by the XGBoost model. So we can conclude that the most appropriate model which can be used for our case is the K-Nearest Neighbors model and the model which can be neglected is the Logistic regression model.

**Final Thoughts!**

After a whole bunch of processes, we have successfully built six different types of classification models starting from the Decision tree model to the XGBoost model. After that, we have evaluated each of the models using the evaluation metrics and chose which model is most suitable for the given case. And you can feel happy about yourself as you have come across and successfully finished one of the most famous financial data science projects. In this article, we have limited our model count to six but, there are many more models to explore. Also, we have built the models feasibly in python but, there are more and more math and statistics behind each of the models. With that, thank you for reading this article and if you forgot to follow any of the coding parts, don’t worry, I have provided the full code at the end of this article.

**Happy Machine Learning!**

Full code:

```
# IMPORTING PACKAGES
import pandas as pd # data processing
import numpy as np # working with arrays
import matplotlib.pyplot as plt # visualization
from termcolor import colored as cl # text customization
import itertools # advanced tools
from sklearn.model_selection import train_test_split # data split
from sklearn.tree import DecisionTreeClassifier # Decision tree
from sklearn.neighbors import KNeighborsClassifier # KNN
from sklearn.linear_model import LogisticRegression # Logistic regr
from sklearn.svm import SVC # Support Vector Machine algorithm
from sklearn.ensemble import RandomForestClassifier # Random forest
from xgboost import XGBClassifier # XGBoost algorithm
from sklearn.metrics import confusion_matrix # evaluation metric
from sklearn.metrics import accuracy_score # evaluation metric
from sklearn.metrics import f1_score # evaluation metric
# IMPORTING DATA
df = pd.read_csv('creditcard.csv')
df.drop('Time', axis = 1, inplace = True)
print(cl(df.head(), attrs = ['bold']))
# EDA & DATA PROCESSING
cases = len(df)
nonfraud_count = len(df[df.Class == 0])
fraud_count = len(df[df.Class == 1])
fraud_percentage = round(fraud_count/nonfraud_count*100, 2)
print(cl('CASE COUNT', attrs = ['bold']))
print(cl('--------------------------------------------', attrs = ['bold']))
print(cl('Total number of cases are {}'.format(cases), attrs = ['bold']))
print(cl('Number of Non-fraud cases are {}'.format(nonfraud_count), attrs = ['bold']))
print(cl('Number of Non-fraud cases are {}'.format(fraud_count), attrs = ['bold']))
print(cl('Percentage of fraud cases is {}'.format(fraud_percentage), attrs = ['bold']))
print(cl('--------------------------------------------', attrs = ['bold']))
nonfraud_cases = df[df.Class == 0]
fraud_cases = df[df.Class == 1]
print(cl('CASE AMOUNT STATISTICS', attrs = ['bold']))
print(cl('--------------------------------------------', attrs = ['bold']))
print(cl('NON-FRAUD CASE AMOUNT STATS', attrs = ['bold']))
print(nonfraud_cases.Amount.describe())
print(cl('--------------------------------------------', attrs = ['bold']))
print(cl('FRAUD CASE AMOUNT STATS', attrs = ['bold']))
print(fraud_cases.Amount.describe())
print(cl('--------------------------------------------', attrs = ['bold']))
sc = StandardScaler()
amount = df['Amount'].values
df['Amount'] = sc.fit_transform(amount.reshape(-1, 1))
print(cl(df['Amount'].head(10), attrs = ['bold']))
# DATA SPLIT
X = df.drop('Class', axis = 1).values
y = df['Class'].values
X_train, X_test, y_train, y_test = train_test_split(X, y, test_size = 0.2, random_state = 0)
print(cl('X_train samples : ', attrs = ['bold']), X_train[:1])
print(cl('X_test samples : ', attrs = ['bold']), X_test[0:1])
print(cl('y_train samples : ', attrs = ['bold']), y_train[0:20])
print(cl('y_test samples : ', attrs = ['bold']), y_test[0:20])
# MODELING
# 1. Decision Tree
tree_model = DecisionTreeClassifier(max_depth = 4, criterion = 'entropy')
tree_model.fit(X_train, y_train)
tree_yhat = tree_model.predict(X_test)
# 2. K-Nearest Neighbors
n = 5
knn = KNeighborsClassifier(n_neighbors = n)
knn.fit(X_train, y_train)
knn_yhat = knn.predict(X_test)
# 3. Logistic Regression
lr = LogisticRegression()
lr.fit(X_train, y_train)
lr_yhat = lr.predict(X_test)
# 4. SVM
svm = SVC()
svm.fit(X_train, y_train)
svm_yhat = svm.predict(X_test)
# 5. Random Forest Tree
rf = RandomForestClassifier(max_depth = 4)
rf.fit(X_train, y_train)
rf_yhat = rf.predict(X_test)
# 6. XGBoost
xgb = XGBClassifier(max_depth = 4)
xgb.fit(X_train, y_train)
xgb_yhat = xgb.predict(X_test)
# EVALUATION
# 1. Accuracy score
print(cl('ACCURACY SCORE', attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the Decision Tree model is {}'.format(accuracy_score(y_test, tree_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the KNN model is {}'.format(accuracy_score(y_test, knn_yhat)), attrs = ['bold'], color = 'green'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the Logistic Regression model is {}'.format(accuracy_score(y_test, lr_yhat)), attrs = ['bold'], color = 'red'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the SVM model is {}'.format(accuracy_score(y_test, svm_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the Random Forest Tree model is {}'.format(accuracy_score(y_test, rf_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('Accuracy score of the XGBoost model is {}'.format(accuracy_score(y_test, xgb_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
# 2. F1 score
print(cl('F1 SCORE', attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the Decision Tree model is {}'.format(f1_score(y_test, tree_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the KNN model is {}'.format(f1_score(y_test, knn_yhat)), attrs = ['bold'], color = 'green'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the Logistic Regression model is {}'.format(f1_score(y_test, lr_yhat)), attrs = ['bold'], color = 'red'))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the SVM model is {}'.format(f1_score(y_test, svm_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the Random Forest Tree model is {}'.format(f1_score(y_test, rf_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
print(cl('F1 score of the XGBoost model is {}'.format(f1_score(y_test, xgb_yhat)), attrs = ['bold']))
print(cl('----------------------------------------', attrs = ['bold']))
# 3. Confusion Matrix
# defining the plot function
def plot_confusion_matrix(cm, classes, title, normalize = False, cmap = plt.cm.Blues):
title = 'Confusion Matrix of {}'.format(title)
if normalize:
cm = cm.astype(float) / cm.sum(axis=1)[:, np.newaxis]
plt.imshow(cm, interpolation = 'nearest', cmap = cmap)
plt.title(title)
plt.colorbar()
tick_marks = np.arange(len(classes))
plt.xticks(tick_marks, classes, rotation = 45)
plt.yticks(tick_marks, classes)
fmt = '.2f' if normalize else 'd'
thresh = cm.max() / 2.
for i, j in itertools.product(range(cm.shape[0]), range(cm.shape[1])):
plt.text(j, i, format(cm[i, j], fmt),
horizontalalignment = 'center',
color = 'white' if cm[i, j] > thresh else 'black')
plt.tight_layout()
plt.ylabel('True label')
plt.xlabel('Predicted label')
# Compute confusion matrix for the models
tree_matrix = confusion_matrix(y_test, tree_yhat, labels = [0, 1])
knn_matrix = confusion_matrix(y_test, knn_yhat, labels = [0, 1])
lr_matrix = confusion_matrix(y_test, lr_yhat, labels = [0, 1])
svm_matrix = confusion_matrix(y_test, svm_yhat, labels = [0, 1])
rf_matrix = confusion_matrix(y_test, rf_yhat, labels = [0, 1])
xgb_matrix = confusion_matrix(y_test, xgb_yhat, labels = [0, 1])
# Plot the confusion matrix
plt.rcParams['figure.figsize'] = (6, 6)
# 1. Decision tree
tree_cm_plot = plot_confusion_matrix(tree_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'Decision Tree')
plt.savefig('tree_cm_plot.png')
plt.show()
# 2. K-Nearest Neighbors
knn_cm_plot = plot_confusion_matrix(knn_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'KNN')
plt.savefig('knn_cm_plot.png')
plt.show()
# 3. Logistic regression
lr_cm_plot = plot_confusion_matrix(lr_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'Logistic Regression')
plt.savefig('lr_cm_plot.png')
plt.show()
# 4. Support Vector Machine
svm_cm_plot = plot_confusion_matrix(svm_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'SVM')
plt.savefig('svm_cm_plot.png')
plt.show()
# 5. Random forest tree
rf_cm_plot = plot_confusion_matrix(rf_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'Random Forest Tree')
plt.savefig('rf_cm_plot.png')
plt.show()
# 6. XGBoost
xgb_cm_plot = plot_confusion_matrix(xgb_matrix,
classes = ['Non-Default(0)','Default(1)'],
normalize = False, title = 'XGBoost')
plt.savefig('xgb_cm_plot.png')
plt.show()
```