# Quantum Feature Engineering for Credit Default Prediction: When and Why IQP Circuits Help Linear Classifiers

arXiv: https://arxiv.org/abs/2609.10505 · HTML: https://mlsanity.com/paper/2609.10505/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 3 of its 11 references that are in the map.
- First posted on arXiv 9 Sep 2026.

## Builds on (most cited first, 3 of 3)

- [Supervised learning with quantum enhanced feature spaces](https://mlsanity.com/paper/1804.11326/) (2018)
- [A rigorous and robust quantum speed-up in supervised machine learning](https://mlsanity.com/paper/2010.02174/) (2020)
- [The Born Supremacy: Quantum Advantage and Training of an Ising Born Machine](https://mlsanity.com/paper/1904.02214/) (2019)

## Abstract (arXiv)

Credit default prediction is a tabular classification problem in which modest gains in F1 translate directly into reduced financial exposure. We ask whether Instantaneous Quantum Polynomial-time (IQP) circuits can produce features that improve a classifier over both its raw classical baseline and Kernel PCA - the strongest unsupervised classical non-linear alternative - at an equal feature budget. The dataset provides 23 financial attributes per client; for an n-qubit circuit we select n of them, encode each as a rotation angle, and read 2n expectation values back out as new features. The motivation for using a quantum circuit is computational: an n-qubit IQP circuit runs in constant depth and encodes feature correlations in a 2^n-dimensional Hilbert space, whereas classical simulation of its exact output statistics scales exponentially in n. Using the UCI Default of Credit Card Clients dataset and five-fold cross-validation, we find that appending 16 IQP features (n = 8 qubits) to a Logistic Regression model raises F1 from 0.462 to 0.517 (+0.055, p < 0.0001). Kernel PCA, the next-best method, reaches only 0.493 at the same feature count; the gap survives Benjamini-Hochberg correction across 12 tests (p = 0.00007). No other classifier - Random Forest, SVM, XGBoost, or k-NN - benefits, which points to a linear-expressivity mechanism rather than a generic improvement. We also show that how the 8 input features are chosen matters: Random Forest importance-guided selection reaches F1 = 0.523, while encoding maximally uncorrelated features drops it to 0.496, demonstrating that the circuit amplifies informative structure rather than creating it from scratch.