Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: MathGuy on December 16, 2014, 12:04:50 PM

Title: Loan Purpose Statement
Post by: MathGuy on December 16, 2014, 12:04:50 PM
https://www.lendingclub.com/browse/loanDetail.action?loan_id=37751945

You see this types of loans where the purpose is "Credit Card Refinancing" but revolving credit card balance is zero or very low compared with the amount borrowed?

Is the borrower untruthful? Am I missing something here?

Thanks
Title: Re: Loan Purpose Statement
Post by: avid investor on December 16, 2014, 12:30:52 PM
Could be the spouse's credit card balances.  That's the problem with all of our attempts to evaluate a loan.  We see only the applicant's credit, debts, and income.  The spouse may be in a very different situation (positive or negative).  Sometimes I would see applicants (when I used to use the browser platform manually), where he/she makes 60k/year but has $2500 in revolving debt payments/month.  I wonder how he/she could possibly be a 700 FICO.  But if the spouse has a paycheck and no debt, or there's other income (child support, alimony, drug money :), etc.), they sometimes work out fine.  The reverse is also true.  When I started my IRA account (and had a lot to invest at once), I put a lot more on some "golden" A & B notes that I wouldn't touch these days (because of the return and early payoff potential).  Some of those went belly-up in no time and I got burned.
Title: Re: Loan Purpose Statement
Post by: Booleans on December 16, 2014, 12:51:48 PM
I haven't done a new backtest in a while but IIRC debt consolidation/credit card loans performed 1%+ better when the revolving loan balance was greater than the requested loan amount.
Title: Re: Loan Purpose Statement
Post by: rawraw on December 17, 2014, 05:05:19 AM
I haven't done a new backtest in a while but IIRC debt consolidation/credit card loans performed 1%+ better when the revolving loan balance was greater than the requested loan amount.
IIRC it is if the requested amount is 80-120% of outstanding revolving loan balance, it did the best.