Print

[redbiglobster]

Please excuse me because I have never been there.

If a borrower with perfect rating (AA, 0 DQ in last 10 years) defaults, I am wondering how much would hurt him.

What if his payments fall behind? Thanks for your input.

I've noticed a few AA people with some DQs in the past have a hard time to fund their loans.
http://www.prosper.com/lend/listing.aspx?listingID=262314
http://www.prosper.com/lend/listing.aspx?listingID=262008

[ccat]

It's not so much that their credit rating suffers, it's the fact that lenders have an underground gang that shows up to break their kneecaps and firebombs their cars.

You aren't going to be late are you? 

[NewHorizon]

Well the delinquent and/or defaulted loan would be duly reported by Prosper to Experian and TransUnion - and maybe Equifax in the not-so-distant future.

All three of these credit reporting agencies produce scores based on their own proprietary algorithms (mathematical calculations applied to the credit data).  So one can't say with any precision how the negative information from Prosper changes their scores.  But of course a delinquent or defaulted loan is bad news in any case - often making it tougher to get any kind of loan later.

Also, if the loan defaults, the borrower is not permitted to return to Prosper to take out another loan.

Moral of the story: live within your means and have a financial back-up plan for the unanticipated problems which inevitably befall us.

[onthefence]

Most other banks will not allow you to get a lone if you have a current DQ.  So that person is essentially screwed for credit for the next 7 years.

It will drop the individual's credit score... how much?  It depends on several factors.

Credit scores will affect:
- insurance rates
- credit card interest rates
- employment options
- ability to get another loan

2ndary effects (which a borrower may or may not care about are):
- It screws over real people who trusted him/her.
- It raises the interest rate for other people of a similar credit rating
- - or eliminates the ability for some credit grades to get loans.

[cowdog]

There is a very good chance that if the borrower disputes the CR, it will be taken off.

Given the inefficiency of Prosper and their mistakes on other items, it is not only possible but probable that they would not respond to a dispute and verify the debt.

[ira01]

There is a very good chance that if the borrower disputes the CR, it will be taken off.

Given the inefficiency of Prosper and their mistakes on other items, it is not only possible but probable that they would not respond to a dispute and verify the debt.

Although that wouldn't suprise me at all, once the debt is sold to the JDB (who has a strong interest in having a credit report black mark to serve as leverage for getting paid), I imagine it would be put back on.  Of course the JDB might strike a deal involving removing the black mark in return for payment.

[Mtnchick]

Right before he defaults, he makes 2 on time payments. Then he can take out another P-----r loan. At least for a limited time. 

[hurricanesfans27]

There is a very good chance that if the borrower disputes the CR, it will be taken off.

Given the inefficiency of Prosper and their mistakes on other items, it is not only possible but probable that they would not respond to a dispute and verify the debt.

Although that wouldn't suprise me at all, once the debt is sold to the JDB (who has a strong interest in having a credit report black mark to serve as leverage for getting paid), I imagine it would be put back on.  Of course the JDB might strike a deal involving removing the black mark in return for payment.

JDBs arent exactly known for their verification skills either.  So if the debtor has any skills he/she can probably get the tradeline knocked off his/her bureau and go on like nothing happened.

[Cheerful_Lender]

Credit scores will affect:
- insurance rates
- credit card interest rates
- employment options
- ability to get another loan

I am a current AA with 0 DQs ever and 10+ years of history.

-My car insurance is about 25% cheaper (not exactly known, but that is a guestimate from all the information I can see).  If I DQ'd on anything I'm sure most of that discount would disapear.

-I get 0% CC deals all the time.  I used to use them alot but no longer.  I also get 8% fixed rate offers... again, no need.  All of those offers would look much worse if I were to default on anything.

-I doubt my employment options would change at all with 1 DQ but everything else being perfect.  Several DQs would certainly put my credibility in question.

-Right now I could get any loan out there.  I could probably qualify to buy a $800,000 house if I wanted to.  I'm eligible for the lowest interest rate anyone offers.  A DQ would certainly disqualify me from an $800k house as my income doesn't warrant that kind of loan.  And I would probably not qualify for the lowest rate at most places for about a year.

Lower credit certainly costs a lot.  Even 1 DQ can make significant impacts.

[ira01]

Credit scores will affect:
- insurance rates
- credit card interest rates
- employment options
- ability to get another loan

I am a current AA with 0 DQs ever and 10+ years of history.

-My car insurance is about 25% cheaper (not exactly known, but that is a guestimate from all the information I can see).  If I DQ'd on anything I'm sure most of that discount would disapear.

In some states (I believe including California, although I am not sure about that), insurance companies cannot take credit scores into account.  So YMMV on this one.