Thursday, October 26, 2006

Can Photos on Prosper Loan Requests Help Determine Default Risk?

Perhaps, people with higher likelihoods of making late payments or defaulting on prosper loans don't want you to know what they look like.

I did some back of the envelope math and found some possible evidence that pictures matter on Prosper loan requests.

I reviewed the prosper borrower stats at "Eric's Credit Community." Eric shows that there are 210 prosper loans that are late in payment. The accuracy of this number is limited in part due to the fact that his number of late non-group affiliated loans is based only on what is reported to him by prosper lenders.

Anyways, I looked at pictures posted (or not posted) on each one of the late loans and found that loan requests without pictures of the borrower occurred 31% more frequently than requests w/ one or more pictures of the borrower.

Pictures are only a piece of the puzzle available to lenders. I recommend continued use of credit report analysis and email dialogue w/ borrowers to determine favorable risk-reward lending cases.

3 comments:

FinanceTravels said...

Interesting. I've always wondered what the benefit of adding a self-photo on your prosper listing and kind of thought the whole thing was silly (especially some of the goofy pictures that I've seen on it). I guess it does have some meaning.

Lazy Man and Money said...

I'm not sure Eric's been updating his site. My data hasn't changed in quite awhile.

Anonymous said...

I will not lend to a picture of a hot woman. Basically, I will not lend to a picture thats trying to make an impression on me as a "good payer" I saw one the other day of a police officer in uniform..."POLICE OFFICER wants to consolidate debt" credit history was for shit...go away