Frequently Asked Questions (FAQ)
How do I find a good Group/good Group Leader?
There is no single measure that makes a group good or bad; it's best to spend some time looking around the forums before you join a group (and if you're in a rush and need a loan NOW, Prosper may not be the best place for you).
What is Vetting?
Vetting is the process of having someone investigate you and your listing to determine whether or not you are a good credit risk. It is entirely optional; many loans are listed and funded without any vetting at all. The process can, however, be an aid in getting funded or in getting a lower rate.
To be valuable, a vetting is best done by someone that Prosper.com lenders know and trust. Most commonly, it is done by a group leader for his or her group members. Indeed, one of the things you should think about when joining a group is whether the group leader will vet you. A well-respected group leader endorsing you (especially if they themselves bid on your loan) can go a long way.
The specifics of what's entailed in a vetting will depend on the specifics of your loan request, as well as how much you feel comfortable sharing with the vetter. Most commonly, however, it would involve you faxing or mailing documents to your group leader, who will then testify that they have seen them and that they can back up the claims you make in your listing. Documents you could send might include pay stubs, confirmation-of-employment letters, credit reports, bank statements, bankruptcy proceedings, etc. There are no hard rules; work with your vetter and with potential lenders to find things that people want to know.
Once the vetter has investigated you, they will usually post their findings for all to see: which documents they reviewed, and what their opinion is. Be aware that the purpose of vetter is not to sell your listing for you, but to provide lenders an honest appraisal of it. Indeed, a vetting can sometimes even make it less likely you listing will fund, depending on what the vetter finds. If a vetter thinks or suspects you are lying or hiding things, you can certainly expect them to say so. Do not expect them to trash their own credibility on your behalf.
It's probably best to wait until after you've been vetted to create your listing; then you can indicate in your listing itself what information has been examined and verified.
Here are some examples of vettings:
Is Prosper a good place to build my credit?
No, it is not.
If your listing funds, a Prosper loan will only show up on your Experian credit report; it will never do anything to improve your score with the other two credit reporting agencies (Equifax and Transunion). If your Prosper loan becomes delinquent and is sent to a collection agency, however, THAT fact will show up on all three reports.
There are several better ways to improve one's credit rating, though there is no one single "best" way for all people. The most common advice given is to get a secured credit card, as this is something that will show up on all three credit reports. (I personally recommend National City's card, but there are many.) You may want to check out the "Credit repair and advice" forum on the Prosper messageboards, or one of the numerous credit-repair messageboards that discuss strategies for improving one's credit rating (for example, www.creditboards.com) and find the plan that best fits your situation.
Most lenders are well aware that Prosper is not a good tool for credit repair. If your listing includes that as a major reason for the request, lenders may take it as a sign that you haven't actually bothered to educate yourself about credit and how it works ... and that isn't going to inspire confidence in you. The bottom line is that "I need to improve my credit" is not a good thing to put in your listing.
Why are lenders so mean/nosy/arrogant?
With very rare exceptions, they aren't. What they are is blunt, skeptical, and bottom-line oriented ... in other words, good businesspeople.
If you find the lenders' personalities abrasive, it is probable that you have misunderstood why lenders are here. Most of them are not here to help people, to give second chances, or to make friends; they are here to make money. If they can do all the rest of things while also making a profit, that's fine, but Prosper is not a charity, it's a business, and making a reasonable profit comes first.
The vast majority of Prosper lenders are not idle rich people sitting by the pool; they are working folks, and the money they invest in Prosper is money that they want to get back to use for their retirement, their kids' education, their daughter's wedding. They're trying out Prosper as an alternative to the stock market or real-estate investing, and they treat listings much the way they'd treat a stock they're thinking about buying -- they're going to ask tough questions, analyze data, and investigate the CEO of the company.
If you feel like you're being investigated when you ask for a loan, it's because you are. Prosper lenders have FAR fewer hard facts about you than they do about most stocks they might invest in, and they have far fewer facts than most banks would have if you were making a loan request there. When you post in the "review my listing" forum, you are making yourself available for investigation --indeed, you are literally ASKING them to do so.
"That's fine," you cry, "but why do they have to be so mean?"
They really aren't. They may be callous and indifferent, and they'll certainly be blunt -- but that just brings us back to "it's business, not charity." When a stockbroker says that "Exxon is a bad investment," the CEO of Exxon doesn't take it personally, and neither should you.
Why isn't my loan funding but this other loan is?
One of the biggest mistakes a borrower can do is compare their listing to someone else's. Don't worry about why someone else funded. Focus on your own listing. There are many reasons why two people of the same credit score and similar debt ratios might not both fund.
Here's some common ones:
- A has less current DQ's than B
- A is asking for less money than B
- A has had credit longer than B
- A hasn't had a bankruptcy and B has
- A's listing makes more sense than B's
- A is working with a GL the lenders trust, and B isn't
- A is offering a better APR
- A is a homeowner and B isn't
- A is present and responsive on the RML forum, and B isn't
- A takes advice and B doesn't
- A has a better reason/plan for the loan than B
- A knows people here, B doesn't
- A provided a detailed budget, B didn't
- A's documents were vetted, B's weren't
- A has less inquiries than B
- A is in a group that isn't blacklisted, B isn't
- A's picture wasn't a turn-off, B's was
- A has had less DQ's over the last 7 years than B
- A isn't using autofund and B is, or vice-versa
- A sounds sane, and B doesn't
- A is consolidated debt, B is adding to debt
- A ran his listing for 10 days, B didn't
- A is an active lender, B isn't
- A Google search for A didn't reveal anything awful, it did for B
- A seems to understand his credit and how to use it, B doesn't
- A has a much greater income than B
- A is tenacious, and B isn't
- A has family and friends bidding, B doesn't
- A doesn't start multiple RML threads, or bump them every 10 minutes. B does.
- A is pragmatic and flexible; B is rigid and inflexible.
There's other reasons, too. The ultimate reason might be a mix of all of these, some of these, or just one single one of these. No sense worrying about it. Just see which might be holding you back...
Anchor(getfunded) What's the best way to get my listing funded?
See So, you want to borrow on Prosper? - A course at Bald Eagle Loans "to teach borrowers how to maximize their opportunities borrowing through Prosper. While no one can guarantee your loan listing funds (unless they are personally going to fully fund the listing themselves), using this course will help you better understand each step in the Prosper process and thereby improve your chances. This course assumes you've read through the basics on the Prosper site and are ready to take a structured approach to your loan request."
Why wasn't my listing funded?
- Answer here.
What kind of ROI should I really expect?
- Answer here.
How much am I going to pay my group leader?
The GL fees are based on your credit grade and what % rewards they're at. You can figure out how much your GL fees will be by using Prosper's Loan Calculator and inputing your numbers. First, calculate it with "No rewards" selected. Then, change it to your appropriate GL fee level and recalculate it. The difference in the Total of Payments at the bottom between the first calculation and the second is the amount you're paying to your GL.
For instance, a loan that is for a B grade borrower for 5,000:
Rewards - Cost to the borrower
25% - $44.26 50% - $88.78 75% - $133.60 100% - $178.40
For an HR that is getting a 5,000 loan:
25% - $88.78 50% - $178.40 75% - $268.63 100% - $359.67
How can I pay less in group leader fees?
First, you can ask your GL to lower their rates for your listing. They have the power to change their rates on a per listing basis, if they've told (tell) you otherwise they're lying.
If they refuse to do that, you can threaten to leave their group and list with another with lower fees.
If the threat doesn't work, leave their group. People do this every day with cable companies and satellite dish companies. Competition is good.
How should I decide whether or not to join a group?
- Answer here.
What is Prosper's business model? Who is their primary customer?
- Read more here: How does Prosper make money?
Why doesn't Prosper pay interest on my cash balance?
- Answer here.
- Prosper Discussion Forums - Read me first: Prosper members share their wisdom, How to write a good listing on Prosper