Posted by Renaud Laplanche :: July 1, 2007 @ 8:51 pmWe shared on June 20 our concerns about our low approval rate, with only about one third of all loan applications being approved. The low approval rate is mostly due to our minimum requirement of 640 FICO score for borrowers. We believe peer-to-peer lending is not only about getting better rates and better returns: it is also about helping each other, and from that standpoint a 2/3 rejection rate is not fully satisfactory.
The flip side of a low approval rate, however, is a high “close rate”, which is the ratio between the loans that were approved for listing on the site and the loans that were issued (including loans which were not fully funded, but that the borrower decided to take the partial amount rather than re-listing).
Here are the numbers as of June 30:
The close rate is lower (71%) in dollar terms than in the number of loans (76%). This shows that smaller loans have a higher likelihood of getting funded, which is a good thing to keep in mind for borrowers when setting the amount of their loan request as well as for lenders picking their loans to fund. Out of all issued loans, only 3 loans were issued with partial funding, all other loans were fully funded.
As reported by Rob yesterday, borrowers now have the ability to re-list their loan requests, so if you are currently borrowing money on Lending Club and your loan does not get fully funded, remember that you can always re-list and get another shot at getting funded. As more funds become available on the site, we are hoping the close rate will keep on improving.
All this information and much more will soon be available directly on https://secure.lendingclub.com. As a first step, we made available this week all the issued loans, so that both lenders and borrowers can look at examples of successful loans.
As usual send us your comments, thoughts, ideas about peer-to-peer lending in general and Lending Club specifically at feedback@lendingclub.com or by posting comments on this blog.
Better Rates Together
Renaud from Lending Club
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