Eric's Credit Community

Since I added the extended credit breakdown pie charts to the Lender screens, a number of people have asked me what those are for and if they are supposed to be a prediction of future delinquencies in that lender’s portfolio.

The three pie charts displayed there (Current Delinquencies, 7 Year Delinquencies & 10 yr Public Records) actually just an aggregation of the corresponding extended credit fields for the loans that lender has invested in. There are many different extended credit fields on a listing (number of open credit lines, credit utilization, date of first credit line, etc) but the three I show in the extended credit breakdown are generally believed by Prosper lenders to be the most significant in terms of indicating a borrower’s ability to repay. For example, Loans with no current delinquencies, no 7 year delinquencies and no public records are often referred to as “0-0-0″ loans, indicating a much better chance than average that the loan will repay.

So what is this information good for? Well, to make it simple, the more green you see in those extended credit breakdown charts, the better the portfolio is likely to do. As a matter of fact, if you look at many portfolios (my portfolio for example) you will see that the current delinquency chart looks an awful lot like the “loan breakdown by status” chart. This just shows what we should already know intuitively – those who paid their debts in the past will likely pay their debts in the future, and those who didn’t pay their debts in the past will likely not pay you either!