Spotted this loan today with 9 inquiries in the past 6 months:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=65646362Yet Lending Club's standard policy states that they don't accept any borrowers with greater than 5 recent inquiries.
See page 8:
https://www.lendingclub.com/fileDownload.action?file=Clean_As_Filed_20140822.pdf&type=docs
This one had 11 "Inquiries in the Last 6 Months":
https://www.lendingclub.com/browse/loanDetail.action?loan_id=11976398In fact, in my database of LC loans collected so far, I saw 1000+ loans with 6+ inquiries in the last 6 months.
My guesses are:
1. LC does not strictly enforce this rule
2. The credit report got updated after LC put the loan in the platform
3. The loan might have been in the "Custom Program", rather than "Standard Program"
Another possibility, as far as ansatz go, is that only "financial" inquiries count. Every time one moves, sets up utilities, cable, internet, cell,
home insurance, etc, one can expect a flurry of "non-financial" inquiries from these service providers. Additionally, mortgage inqs, within a
rate-shopping window, are supposed to count as a single inquiry, but, often, it doesn't turn out that way in practice and they all show up.
I'd be interested to know what LC says if you inquire. Stuff like this is important given the misaligned incentives a broker has vs the person holding the credit risk.
I received a response from Lending Club today:
Nice response. Thanks for sharing.
This forum post made it to Financial Times blog.
What Lending Club excludes from its loan info
http://ftalphaville.ft.com/2015/12/07/2147015/what-lending-club-excludes-from-its-loan-info/
Thanks for posting the link to the ft article!
I guess I have a few big takeaways after thinking things over:
- The definition of inquiry changed after August 20, 2014.
- Prior to 8/20/2014, "inquires 6 months" referred to ALL credit inquiries
- On and after 8/20/2014, "inquiries 6 months" excluded auto and mortgage inquiries. "Old" listings still incorporate the old definition and did not change to reflect the updated definition.
- This means that the information contained in the "inquiries 6 months" credit field is not comparable across all the historical data. That little wrinkle complicates back testing and model estimation.
- We caught Lending Club's inquiries glitch with this Loan, and indeed it is easy to spot if other loans are listed with greater than 5 inquiries. But how many more borrower applications are out there with erroneous numbers of inquiries, which could go undetected if the total number is still less than 5?
Beginning with the new credit fields that LC is adding this month, we will have a new field related to inquiries: "INQ_FI - Personal Finance Inquiries." What is this and how exactly does it fit in with the current data we have on inquiries? Does it indicate "soft inquiries"? Or is this field equal to the number of auto and mortgage inquiries that are supposed to be excluded from "inquiries 6 months"? And what is the time frame during which Personal Finance Inquiries must be incurred in order to be included in "INQ_FI"? Is it still 6 months?