Fynanz improves borrower vetting

Fynanz made several improvements in the vetting process for new borrowers including the following changes:

  • School certification is obtained directly from a borrower’s school (or a borrower has to provide a school transcript and tuition bill) to verify enrollment, class standing, and whether the borrower is enrolled half-time or full-time.
  • All borrowers are required to provide valid bank account information prior to application approval. If this information is determined to be invalid, the application is rejected until it can be verified.
  • In most cases, Fynanz contacts personal references provided by the borrower.
Some loans that were listed prior to these changes have been canceled prior to funding until borrowers can meet these requirements. In addition, there are fewer available loans as a result of these changes. The available loans, however, are of a higher quality and much more likely to complete the funding process.

Fynanz is the first peer to peer lending company to match most bids from family and friends. They are currently running a promotion where they will give some new lenders up to 5% of the amount loaned.

Fynanz, which just launched a few months ago, has received a lot of publicity due to the current student loan crisis. Today, for example, they were featured in the U.S. News & World Report.

10% off Lending Club fees

New borrowers can get 10% off Lending Club loan origination fees through an exclusive Credit Karma offer.

Borrowers on Lending Club are only charged as a result of an accepted and approved loan. Fees range from 0.75% to 3% depending on the borrower's credit grade. For example, if a C borrower requests $5,000 they will be charged a processing fee of 2% or $100. This borrower would save $10 by signing up through Credit Karma. The fee breakdown on Lending Club fees is:
  • A - 0.75%
  • B - 1.50%
  • C - 2.00%
  • D - 2.50%
  • E - 2.75%
  • F - 3.00%
  • G - 3.00%
The total fee could range from $7.50 (a A-credit grade borrower approved for $1,000) to $750 (a G-credit grade borrower approved for $25,000). Based on these fees, 10% off might only save a borrower with good credit on a small loan less than a dollar. However, a borrower with poor credit requesting a large loan could save as much as $75 through this offer.

Credit Karma is a new company which offers free credit scores. Yes, it's really free. Not one of those tricks where you are suddenly charged monthly fees. I signed up last month. Credit Karma makes money if you sign up for one of the offers which will be presented to you. Credit Karma shows personalized offers, such as this Lending Club offer, based on your credit profile.

The downside for those concerned about privacy - you do have to provide your social security number in order for them to pull the necessary information. Credit Karma claims they "will never share your personal information."

In addition, there are several different types of credit scores - FICO, Experian PlusScore, VantageScore, and others. The score provided to me through Credit Karma was a TransUnion score, not my FICO score. TransUnion's scale is 150-950 unlike FICO which is 300 to 850. It appears Credit Karma may provide different scores to different customers.

I also found Zopa listed on Credit Karma but there were no special offers or coupon codes. Prosper was running banner ads but did not provide other deals.

Lending Club nominated as top innovator

Lending Club has been nominated as one of the Top 100 Internet innovators in the U.S. by the Industry Standard in the 'Commerce' category. Others nominated include Mint, Zillow, Farecast and Wesabe. The winner will be decided by popular vote and announced at the end of October.

Peer to peer lending companies have received many awards. Earlier this year, Prosper joined Amazon, Walmart, IBM, and others on Fast Company's 2008 list of the 50 most innovative companies. Prosper was also Time magazine's #1 website of the year in 2006 and one of the 50 best websites of 2007. At the 2008 Retail Banker International Forum, Zopa won the 'Most Threatening Non-bank Competitor.'

So, here's the question - if they win are they going to reuse the speech from their 2008 Webby?

Prosper eliminates defaults

In a site update today, Prosper eliminated all defaults - well, they renamed them. Defaults will now be known as "charge-offs". As reported on their blog:

"We are changing the way we display seriously delinquent loans on the marketplace performance page, renaming “Defaults” as “Charge-offs”, and moving the “4+ months late” loans into the “Charge-offs” category. We want to have transparency in the reporting of our marketplace’s default rate, and this change should help lenders take a more direct measure of the market’s charge-off rate. This change is the first step in a larger change we will be making in the way delinquent loans are displayed in lender portfolios."

In addition, Prosper will now allow some new lenders to make loans with PayPal and credit cards. Borrowers can invite family and friends to bid on their loan. After clicking on the link in the invitation, new lenders can place their first bid via PayPal or credit card. This is an attempt to make the site easier to use for new members.

Prosper Releases Market Survey Results

Prosper just released their monthly market survey for July 2008. For the first time, the survey includes statistics showing how borrowers who list and get funded in the Prosper marketplace indicate how they plan to use their personal loans. Also noteworthy, the percentage of prime borrowers (borrowers with 720+ credit scores) hit an all time high in July, accounting for 47% of funded loans.

July 2008 Funded Loans
  • Personal Loan for Debt Consolidation - 43%
  • Personal Loan for Business Use - 25%
  • Personal Loan for Home Improvement - 7%
  • Personal Loan for Education - 3% (Fynanz is trying to own this niche)
  • Personal Loan for Auto/Vehicle - 3%
  • Personal Loan for Other Use - 19%
Last year, soon after Lending Club launched, Lending Club released similar statistics showing their "smart" borrowers were requesting most loans for debt consolidation or to pay of higher credit card rates.