One of the early trends we are seeing in the marketplace since re-launch is a dramatic improvement in the quality of listings.
• The average credit score of listings on the site improved from 584 in early October 2008 to 711 in the first two weeks since re-launch.
• 16% of the listings have a Prosper Rating of AA to B, versus 3% of the listing qualifying for these ratings in October 2008.
There are a few reasons for the shift in quality. First, Prosper increased the minimum credit score required to post a listing from 520 to 640. This has reduced the number of listings with subprime credit scores. In addition, the credit crisis has significantly reduced the sources of credit for consumers, even those with excellent credit scores. Quality borrowers are finding they get competitive rates, transparent loan terms and a simple application process when they choose Prosper.
Combine the better quality listings with Prosper’s best-inclass rating system and Prosper’s auction pricing and it is easier than ever to make great returns from a well diversified portfolio of Prosper loans. Prosper’s rating system is based on the performance of 29,000 loans, in addition to national credit bureau data. Prosper is the only peer to peer lending site that permits lenders to set the minimum acceptable interest rate for listings on which they bid, rather than relying on a black box pricing model.
If you’re considering becoming a lender, now is the time.