The credit scoring blind spot – Macroeconomics

In February 2016, about six months after rating a securitization, Moody’s found “faster buildup of delinquencies and charge-offs than expected” in the pool of Prosper loans backing the ABS. Experts had noticed deterioration months earlier…pundits discerned a signal…insights followed—macro trend…credit cycle…borrower stress. But then in July, Moody’s decided there was “absence of substantial deterioration”.  So, what …

The credit scoring blind spot – Macroeconomics Read More »

Credit scoring with an eye to the future

Much has been written about the death of the FICO credit score.  See Wall Street Journal’s “Silicon Valley: We Don’t Trust FICO Scores” and American Banker’s “Will Fintechs Kill the FICO Score?” for recent (Summer 2016) articles.  The narrative invariably revolves around how the score is backward looking…considers limited individual past behavior…and can occasionally misfire …

Credit scoring with an eye to the future Read More »

Winning @ Lending Club

By including information concerning the economic vitality of a borrower’s locality as a decisioning criteria, investors can improve the performance of their Lending Club loan portfolio.  Overlaying local economic vitality data provides additional insights about borrower creditworthiness that is not captured by traditional credit scoring models.  Our framework blends this additional information into an expected …

Winning @ Lending Club Read More »

A map for very small business lenders

Spread across states and active in all industry sectors, over 5 million businesses in the US employ fewer than 20.  Their total sales of over $4 trillion and total employment of over 20 million is roughly comparable to the entire Canadian economy!