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July Update from President, Aaron Vermut

by Prosper on 08/2/13

July represents our fifth consecutive month of record growth with over $30 million in loans originated through the Prosper platform. This is more than double the originations from July, 2012, and brings Prosper to more than $580 million in loan originations since inception.

As Prosper grows, so does the demand from our customers, and we remain focused on making sure we’re making the right changes and product enhancements that will enable us to offer our services to a wider range of borrowers and lenders. Here are a few of the accomplishments from July and some changes that you can expect over the coming weeks and months:

  • New addition to the Board of Directors – During the month of July, Prosper Marketplace welcomed Raj Date to the Board of Directors. Mr. Date, who is currently managing partner at Fenway Summer, is the former Deputy Director of the United States Consumer Financial Protection Bureau. He is also a former member of Prosper Marketplace’s Board of Directors, a position he stepped down from in 2010 to work at the CFPB. Mr. Date brings a wealth of knowledge and experience from his time at the US Consumer Financial Protection Bureau, and we’re thrilled to have him back at Prosper Marketplace. Read the official press release
  • New credit scoring – In the next few weeks we will be updating the credit bureau model that we use in conjunction with the Prosper Score to calculate our Prosper Rating. We are replacing our current scoring model, Scorex Plus™, with the more widely recognized FICO® 08 Score. Our Credit Risk team has done extensive statistical analysis to evaluate several bureau scorecards and found that the FICO® 08 Score is the most effective. The FICO® 08 Score is the most frequently used credit bureau scorecard among lenders in the consumer finance industry. This change will more directly align us with industry standards, and will also enable us to better meet borrower expectations with our rates and offers. 
  • Improved borrower experience – We are in the process of developing and releasing several enhancements to our borrower onboarding process. We expect these changes to have a huge impact on the borrower experience overall. What this means is that we will be making changes and upgrades to the way we interact with borrowers with the goal of making posting a loan simpler and easier. Stay tuned for more information.

Along with all of the above developments, we continue to see great momentum in the press as people start to take note of P2P and the opportunities it brings borrowers and lenders.

And, if you missed it, last month Ron Suber, Head of Global Institutional Sales for Prosper Marketplace, gave the keynote speech at LendIt 2013. You can view it here. Coming up in August, Ron will be delivering additional keynotes at P2P Lending and Social Economy conferences in both Cambridge and Las Vegas. Stay tuned for more information. Thanks for reading!

Aaron Vermut
President, Prosper Funding LLC

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10 Responses

Thomas Brandenburger | August 2nd, 2013 at 2:15 pm

Hi, Good news. Will you be filling in the historical loan data with FICO score ranges to replace the Experian score? Bureaus have this and it should only be a small fee to do so but would be invaluable to lenders.

J-72 | August 7th, 2013 at 4:50 am

Some ideas: 1. A product I have seen recently at a credit union allows people with poor credit to borrow money that they put in to a savings account and then reports their payments back to the credit bureaus. Before Prosper could have friends and family help in a similar manner. Also, competing lenders helped bring the rate of borrowers’ interest down. These ways helped people who were victims of identity theft rebuild credit scores and also helped people who had faced economic ruin from various hardships to re-build their lives and financial footing again.

2. When a person asks to speak to a supervisor or for the corporate office, he or she should get that information right away.

3. The groups and comradery were very helpful and fun. The connecting people part of Prosper was very helpful, too, a little like “social media,” fun but not time-consuming.

4. It is good you can do self-directed IRAs here. Many people need to learn more about self-directed IRAs.

5. It is good to be able to be a borrower and a lender. Borrowers could be limited in what they can invest. Investing $25.00 once-in-a-while teaches you a lot, though, about investing.
6. Thank you so much Prosper borrowers, lenders, and employees. Thanks.

Aaron Vermut | August 7th, 2013 at 8:17 am

Thomas – Good question. Prosper, and all other lenders, are not legally able to purchase retroactive FICO scores (or other credit bureau data) based on a specific loan. That said, on an anonymous basis, de-linking the data from a specific customer / loan, we do have historical FICO scores for loans issued at Prosper that were issued based on applicant credit information from April 2008 through January 2012. This is the same information that we used to craft the new Prosper Rating using the FICO score. This data is available to investors on the investor downloads page (http://www.prosper.com/invest/download.aspx).

Joe | August 9th, 2013 at 8:45 am

Will lenders have direct access to view borrower FICO scores, or is the FICO score only going to be a factor in the development of the Prosper Rating?

ProsperLoans | August 12th, 2013 at 9:18 am

Hi Joe- Great question. Yes, lenders will have direct access to view the borrower FICO score in a similar fashion to how they view the Scorex Plus score today. More details on this coming soon!

Wayne | August 13th, 2013 at 9:35 am

That’s great that lenders will have access to borrower’s FICO scores. That’s something I have always wanted to view.
Do you foresee Prosper rates declining for borrowers in much the same manner as Lending Club? Apparently, it’s been difficult for them to secure high quality borrowers. As someone who can only fill 25% of my orders at a time, an increased number of borrowers would be welcomed.

Sean Turner | August 13th, 2013 at 8:38 pm

Greetings. I always assumed that a lot of the variation in yeilds for someone with the same range of credit score was mostly done as a result of the risk management team at Prosper adding a dose of your secret sauce. I know leadership has a good bloodline of risk management to pick out the top 10% or so of applicants for us. Should I be expecting a bigger change in what I see as far as interest rates from here out? Meaning pretty consistent if you score 720-760 most people will have the same rate after this? I’m after a little more color to see how much influence the raw credit score had over the approval and rate customers got, vs your own in house risk assessment.

Sue | August 20th, 2013 at 10:22 am

I don’t understand, or trust, Prosper’s rating system when I see loans like the following (see below). How can Prosper rate this an A loan, with a score of 7, when this borrower has 15 current delinquencies and 10 more over the past 7 years? I see A and AA loans like this being offered all the time. Why aren’t these loans given a worse rating — with a higher interest rate to lenders willing to bear the added risk?

Prosper rating:
Prosper Score (1-10):
Credit score:
700-719 (Aug-2013)
Now delinquent:
Amount delinquent:
Public records last 12m / 10y:
0 / 2
Delinquencies in last 7y:

ProsperLoans | August 27th, 2013 at 10:02 am

Hi Sue-
Thanks for your question. In our experience, borrowers with this type of credit history and ability to pay have on average performed with ‘A’ level defaults historically. The ‘Now delinquent’ information on a borrower’s credit profile includes the number of accounts the borrower currently has that are late. This includes accounts with charged off balances. The important aspect of this attribute is that it may include older trades that are charged off. In this particular listing, the borrower had 2 public records in the last 10 years. If you look more closely at the borrower’s current/open credit lines, you will see that they are showing current 6 out of 6 of their open reporting trades.

Prosper’s website empowers our lenders to choose specific filters in order to customize their investment options. We think that is part of what makes peer-to-peer lending so great.

Chris Jacob | August 28th, 2013 at 7:50 am

It still seem likes there are very few B & C loans these days and almost non existent D, E & HR loans. When do new loans come on the platform?
To another commenter’s point it seems like a lot of people with not very good credit profiles in terms of scores, public records, open credit lines, large outstanding balances and numerous deliquent accounts are getting A ratings which further reduces the higher interest rate pool. Is it just because to secure more borrowers you are having to offer reduced rates with the increased investors and focus on peer to peer lending at large?

posted in Borrowers,Featured,Lenders 10 comments »

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