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[shbl]

Back when Prosper was useful I took out a loan which some of you funded.  At the time I was a C I think after having gone through a difficult time when my husband had almost died.  Long story short we were young and not protected/covered as well as we should have been.  The Prosper loan helped us to rebound and it was used for exactly what I said it would be.  35 payments later and a month early it was paid off.  We had the capacity to pay it off a year earlier but we were appreciative of the faith people put in us and understanding how bad Prosper had turned for many of you we figured the few hundred dollars was our premium.

When it was paid off one of the prominent posters here was nice enough to send an email basically saying thank you for being one of the few that met their obligation and did what you said.

It's been awhile since it was paid.  My credit scores are all now in the mid or upper 700s.  I have very little debt (no revolving debt but a strong history there), some car leases etc, all paid on time with a perfect history now for 5+ years.   For kicks I responded to one of the Prosper email promotions and did a dummy listing where they pulled my score before it went live.  HR.

No inquiries in the last 18 months and 1 in 2 years.  No new accounts in the last two year aside of a car lease.  1% revolving debt of about 1800 (fridge which is now paid in full).  No late payments in 5 years or any other black marks. 

When my credit wasn't great 5 or so years ago I was a "C"....with creditors tripping over themselves to lend us money now I'm an HR.    It goes to show two things - how terrible their original (experian) scoring system was back a few years ago.  And how badly they have over-compensated now.  I'd probably have paid 13-18% for a loan through Prosper to fund a project because it's an wasy process and it worked for us.  But the 35% rates they were promoting.....they're going to deter a lot of loyal repeat customers who can just go to lending club or their local bank.

Just figured I'd share my experience. 

[kenL]

Thanks for sharing, it's good to see some borrowers experience before and after the "change". Would you mind sharing with us your "dummy" listing, I'd like to see it and try to understand why it is an HR now.

[christoofar215]

The letter scoring is absolutely fucking worthless.  Don't even look at it.


When I took out my blender loan, Prosper gave me a C.  I was a 650 FICO.   For the next 3 years I put in tester listings to see where Prosper was rating me, and as a free "credit score check".

During that time, my fake $1,000 listing bounced all the way from HR to AA.   My FICO scores have only increased since that time.   My Experian FICO score when I did my mortgage was 760-something.  My Equifax at the time finally hit 803.   I also had zero debt balances across all accounts, 12 revolving credit lines open and close to $100K in available revolving credit.


I checked Prosper just now and this is what I got... minimum loan size is now $2,000


$2,000.00
Personal loan   
3
Years   
20.99%
Lender yield
D
Rating




I already have a previous prosper loan that's fully paid-off.    Right after I paid it off and I tested a new listing I got AA.   A few months later, HR.   There is no rhyme or reason to Prosper's scoring.


Don't trust it.  It means NOTHING.

[shbl]

Thanks for sharing, it's good to see some borrowers experience before and after the "change". Would you mind sharing with us your "dummy" listing, I'd like to see it and try to understand why it is an HR now.

It never went live.  When you go to create a listing part of the process is/was them telling you what your score is and the maximum loan amount.  You'd think they would rate previous payment experience "with the company" as some badge of merit but they do not.  I'll never bother checking again as it's not worth my time but I'll never understand it.  Figure that this is a business model that had a horrific failure rate in terms of accurately picking credit worthiness with the help of EXP.  It appears that with the same help (haha) from EXP they are now instead missing out on moderate returns from reliable previous customers.

All I can figure is they're weighting the few months of trouble in 2005 on a total of 2-3 accounts more than they are the 20 years prior and 6 years since.  You'd think 20+ positive accounts, none less than 2 years old aside of the car, light usage with a strong payment history would have value - in addition to almost no inquiries but maybe EXP is trying out something new.

In about 10 minutes and with two paystubs I did get a plat rewards card at 11% with no annual fee/25k from the first and only place I applied.  It's the lowest rate they offer, and that's been my experience with anything else in the last 2-3 years from cars to mortgages....best rates they offer.

[christoofar215]

There were several knowns that we found with Prosper that Prosper never would put in their portfolio plans that gummed up the works.

It all had to do with second loans.



ORG'ers found that if a Prosper borrower took out new listings while there was still a loan in progress, no matter the duration, the likelihood of default on both loans approached 100%.

On the flip-side, any Prosper borrower that paid off more than 2 loans had an inverse liklihood, but ONLY if the amounts borrowed were near each other.   i.e. one loan for $4,000 and the next one for $5,000, the next one $3,000, etc.    Borrowers who go from one small loan and pay it off then start listings for one giant one were guaranteed to default.

A few Prosper borrowers had churned through as many as 6 paid-off loans.

So in Prosper's infinite wisdom, there was NO way to filter out second loans when Prosper started allowing them.   If you had a PP and set to autofire, you could be picking up people who were very sure to default, but had a good credit score (for now).   The listing on its own seemed OK, but then if you manually looked at the borrower's profile you'd notice the other loan out there barely a year old if that, and the new listing asking for substantially more money.



Second loans are another reason why going off the Prosper rating is stupid.   Prosper never takes anything that we learned on .ORG and applied it back to their screening because that's not in Prosper's best interests to tell you exactly what risks you're facing or exactly what's happened in the past.



We like to sugarcoat the past and put up pictures of happy borrowers with perfect teeth.



Oh yeah, also the number of times a borrower has re-listed was also a BIG clue on the likelihood to default.    Lots of re-listings == borrower is desperate.

[kenL]

Thanks for sharing, it's good to see some borrowers experience before and after the "change". Would you mind sharing with us your "dummy" listing, I'd like to see it and try to understand why it is an HR now.

It never went live.  When you go to create a listing part of the process is/was them telling you what your score is and the maximum loan amount.  You'd think they would rate previous payment experience "with the company" as some badge of merit but they do not.  I'll never bother checking again as it's not worth my time but I'll never understand it.  Figure that this is a business model that had a horrific failure rate in terms of accurately picking credit worthiness with the help of EXP.  It appears that with the same help (haha) from EXP they are now instead missing out on moderate returns from reliable previous customers.

All I can figure is they're weighting the few months of trouble in 2005 on a total of 2-3 accounts more than they are the 20 years prior and 6 years since.  You'd think 20+ positive accounts, none less than 2 years old aside of the car, light usage with a strong payment history would have value - in addition to almost no inquiries but maybe EXP is trying out something new.

In about 10 minutes and with two paystubs I did get a plat rewards card at 11% with no annual fee/25k from the first and only place I applied.  It's the lowest rate they offer, and that's been my experience with anything else in the last 2-3 years from cars to mortgages....best rates they offer.

If you've had trouble within the last 7 years, it will probably affect the rating pretty negatively. They look 7 years back; maybe they don't need to look that far back but they do. LendingClub only adds up delinquencies from the last 2 years and then they report the months since last delinquency (up to 7 years). If you have a Public Record, and you have delinquencies then you'll be rated pretty low. Once those get off the credit profile you'll start looking good. These days Prosper ditched the rating based solely on Exp. That turned out to not work so well. Now they have their own proprietary rating system based on EXP and much other info from the credit report and elsewhere.

They do now give a bit of a bonus for previous lenders, but that bonus only shows up in the interest rate, not the rating. As an HR you'll end up with a 31.25%. Not to enticing I'm sure. If you can 11% somewhere else, go for it.

[shbl]

I have no doubt it's Prosper thinking they know better than the average bank.

Truth be told if they could have gotten a default rate anywhere near the average bank or credit union they'd be thrilled.  Both of which give out unsecured loans and cards all the time.  I actually just pulled myfico, 770 and 780 roughly for TU and EQ.  Experian reports 760ish but that's their fake score.   The scores have been that way for a year or two yet with Prosper I'm an HR down from a C a few years ago when everything was much more recent and I had no restablished credit.

I have no doubt my loan would have been funded if I went through and was willing to pay the outrageous fee but I had other options. 

With the credit markets easing I'm not sure how useful lending club and prosper will be ultimately.  At the end of the day who would use these solutions over going to their local credit union or bank and borrowing at a reasonable market rate?  I suspect only those that cannot do those things.

[christoofar215]

I have a $30,000 credit card with NFCU at 11 point something.  Way cheaper than what Prosper is offering for my score.  Plus they're doing free BT's now and it also behaves like a LOC (at the Cash APR, of course), so it's not limited to card-present transactions.

After $10,000 in card-present transactions the reward is raised from 1% cash back to 1.5% cash back.  When you hit your anniversary date it resets back to 1% cash back.


You just have to have a decent Equifax score and hard proof of income (I sent in multiple years of tax returns and a W-2), and they'll give you a limit that pretty much fits what they think you are capable of handling.


Even if you screw up, it's a national credit union so the default APR is 18% at the very highest.   That's lower than Capital One's standard APR.

[christoofar215]

Is it just they're adding a category named HR, or are they actually lowering the minimum credit score?

I just checked the help, and it still says minimum score is 640 to borrow, though they might simply not have updated it yet.

I forgot to ask this... this 640 score, is that the SCOREX score?

A real FICO 640 is actually an average credit rating, although it's barely enough now to qualify for an FHA mortgage---although if you look hard enough you'll find an FHA lender these days who will originate with a 640 (they're telling people now not to bother until you can at least pull it up to 680 to be assured an approval).



HR people, mostly Creditboards folks, have scores in the low 600s and mid to high 500s.    So if SCOREX goes to 950 or whatever it is... that means a 640 is really like a FICO 570, which is a terrible score.    I mean, if I defaulted on something my high 700s FICO would probably get knocked down to the mid FICO 600s which should still make me eligible for Prosper without problems, and that's with a fresh 0-day default and collections.



I'm thinking Prosper's 640 is actually pretty low quality credit.

[ira01]

poof

[God-Father]

poof

Well that thought didn't last long.