Lending Club Launches Its Most Advanced Credit Model Ever

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Lending Club is feeling pretty good about its newest credit model, according to an email that circulated to retail investors this morning. A copy of it is below:

We have launched the most advanced and predictive credit model ever used on the LendingClub platform. It’s the latest in LendingClub’s long history of innovation on behalf of borrowers and investors.

The new model leverages machine learning and 10 years of LendingClub data to better assess and price credit risk. LendingClub has helped 1.5+ million borrowers since 2007; each borrower provides unique insight that we can use in our next decision.

What investors need to know about the new credit model:

• It’s 24% better at differentiating the likelihood of a borrower charging off than the fourth-generation model, and is more predictive than a borrower’s FICO score alone.

• It’s built on a wealth of proprietary data, incorporates more data points for each borrower, uses best-in-class modeling techniques, and uses dozens of new custom attributes that are predictive in assessing risk.

• We expect loan volume to shift toward higher quality grades (grades A and B) because some borrowers will qualify for lower interest rates under the new model, and other higher-risk borrowers, who may have received an offer previously, will be screened out.

• We continue to see lower delinquency rates across grades and terms in the existing loan portfolio than in the second and third quarters of 2016.

We see this credit model as the latest innovation in our continuous enhancement cycle, and one that helps us continue to provide investors with solid risk-adjusted returns. See here for more on what makes the model unique.

Last modified: September 11, 2017

Category: Marketplace Lending

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