LendingClub.com

Good Morning All,

Its Sunday, January 24th. Another bright sunny day in America’s capital city.

Todays posting is about peer to peer lending. As many of you know, there are lots of ways to make money on-line. One of those is by lending your cash directly to borrowers using an internet lending service. The most common of these is Prosper.com, but there are others like Zopa and LendingClub.com.

We DINKs had some problems with prosper, largely due to a poor decision to loan to high risk borrowers. As a result, we’re shifting our on-line lending assets to debt reduction as the money becomes available.

However, I personally enjoy lending online and we were able to score a promotional offer at LendingClub, so I wanted to give our readers a quick update as regards our progress on that site.

The account set up process at LendingClub has been mostly smooth. There were some problems with the initial set up. This was because we first signed up as a team, e.g. Miel and James. But, with LendingClub you can only sign in as an individual. So, their processes couldn’t match our names to a single social security number or bank account. It cost us a couple of days and an email or two, but LendingClub’s staff was responsive and its heartening that their sign in procedures have some integrity. As I recall, identity verification was point of discussion when prosper.com was first getting started so its good that LendingClub has put some thought into this part of their business.

Account deposits are no problem. It took another couple of days for our first credit to reach our balance, but there weren’t any hassles with that part of the process. So, the sign up and account set up procedures were relatively painless.

We haven’t started shopping for prospective borrowers, but my initial impression of the service is that the browsing options seem “clunky”. – I know that “clunky” isn’t necessarily a helpful description for you, but looking through menus takes some work. Specifically each borrower’s profile has a line of text and a couple of icons to represent various characteristics of their profile including requested loan amount, credit worthiness, etc. Its not as user friendly as one might like.

Despite the clunky interface, I think that LendingClub may have more integrity than some of its competitors. They only allow borrowers with FICO scores greater than 650 on their site, but also borrower profiles usually reference only characteristics pertinent to the loan and say less about the borrower’s demographic profile. There isn’t a picture of the loan applicant so you don’t know whether the person is attractive or ugly, fat or skinny, classy or geeky. That’s good, because I suspect that with some P2P services impressions of a borrower’s social desirability may conflict with their objective credit profile. That is with a service like Prosper.com, an attractive white lady with marginal credit may have an advantage over an overweight black man with good credit. Disagree with me if you like, but the fact LendingClub is blind to these sorts of considerations is a big plus.

I’ll update you when we do some lending, otherwise these are just my first impressions.

Check it out: LendingClub.com.

Best,

James