Sunday, September 18, 2011

Prosper's Top Tips for Borrowers

On Friday Prosper blogged their Top-Tips for Borrower Success. Among the highlights is the following tip:
Write a thorough loan purpose and description.
This one strikes true, especially after my post the prior Tuesday. Allow me to post the graph of my 2010 findings for loan description length again:

Borrowers: it looks like you are already writing longer descriptions when you have a lower Prosper rating (the blue line) which, in my opinion, is a good thing. When we take a look, though, we see that Lenders are funding loans which have even higher character counts than average (the red line.) Indeed, at a B grade and lower it appears that loans that are funded have about 50 more characters than the average request. And HR Grade loans are funded, on average, with even more characters than that. (The aforementioned post from Tuesday shows similar results for 2009 and Pre-2008 requests.)

The data is correlational, not causal, so I can't say that having a longer loan description will make it more likely to get funded -- but it certainly doesn't hurt. Plus, from personal experience, I'd rather fund a loan when I have a clear idea of how my money will be used (and repaid.)

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