Lending Club
Posted by admin on November 8, 2009
Having heard about Lending Club on several other blogs I recently opened an account. I had previously had an account with Prosper.Com, however I had never funded it because at the time I opened it they would only allow funding from a bank account.
My reasons for choosing Lending Club was mostly that I could fund it through my PayPal account which granted me an extra layer of security, and also that I heard that their lending screening and information was better than Prosper.
My methods for choosing loans were mostly two fold. The first was a high credit score which reduces my rate, but helps protect me from loan defaults. I chose loans that for customers that had a credit score ranging from 714 to 799. The loans are ranked A-G with the better credit score being ranked higher. A rated loans have credit scores from 750 to 799 and B rated loans have credit scores from 714 to 749. I searched for loans ranked either A or B. You are able to sort loans by their rankings when looking for notes to invest in.
Lending Club note Screen
The second criteria, was amount of time on job. It is obvious when underwriting a loan that you want to make sure that there is sufficient room for the borrower to repay the loan so most people would look at debt to income, however I look at length of time on the job. Especially given the current environment if someone has been on the job for at least two years then they have weathered the layoffs in the last 12 months and are probably a valued employee as long as the business is operating. Remember if you have a credit worthy borrower the odds are likely that they will pay the note unless they are unable. So if they remain employed your odds of default go way down.
Social lending is not for everyone, but it is a great investment for spare cash in small amounts. Right now Lending Club has lent over $65 million an this amount continues to grow each month.
Social lending has the opportunity to change lending as we know it. Do yourself a favor and check it out. You could make a little money and may even get yourself a cheaper loan. You can go join at Lending Club or if you are interested you can e-mail me at contact@keepmydollar.com and I can send you an invite that will add a $25 bonus to your account.
