Nearly a Third of Lending Club Borrowers’ Income Is ‘Not Verified’

  • JJ Hornblass
  • February 2, 2016
  • 0

canstockphoto3997486Lending Club Corp. seems to be facilitating many loans that do not include income verification.

According to a Bank Innovation analysis, nearly a third of Lending Club’s loans outstanding during the first nine months of 2015 are classified as “Not Verified.” That amounts to nearly 82,000 loans. Another 43% of Lending Club loans, or around 126,000 credits, are income “Source Verified,” while 28%, or about 82,000, of LC loan borrowers have had their income “Verified.”

Lending Club has recently made a vast quantity of data available for analysis. The data offers a unique window on marketplace lending and underwriting practices at Lending Club, a leading alternative lender.

A “Not Verified” share of the portfolio of 29% by volume of accounts is high, compared to most consumer lenders. (The “Not Verified” loans make up 22% of the portfolio on a dollar basis.) However, the average debt-to-income ratio on these loans is 18.47 compared to 19.10 for the entire Lending Club portfolio. A DTI in the 18 range is low, but the average income on “Not Verified” loans is about $68,600, compared to approximately $76,000 across the whole portfolio. Higher income tends to imply better credit performance.

Lending Club did not respond to a request for clarification.

A total of 2.8% of the “Not Verified” loans have either been charged off or are delinquent.

Lending Club [ticker: LC] has a market capitalization of $2.8 billion. LC had about $4.4 billion of loans outstanding at the of the 3Q15.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at or 212-564-8972.

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