As a credit marketplace connecting borrowers and investors, LendingClub continuously adjusts to serve both borrowers and investors. To best serve our members, frequent adjustments are made to the platform based on a variety of inputs like investor feedback, marketplace demand, loan performance, and the general interest rate environment.
Adjustments are made to the platform regularly to adapt to changing market conditions and new insights. These changes have included a wide variety of actions over time, including new borrower features (for example, adding the ability for borrowers to apply jointly and the ability to pay off debt directly), interest rate changes (to both respond to and anticipate changes in the interest rate environment), and credit expansions or tightening (to offer competitive risk-adjusted returns to investors). These types of features and changes enable us to responsibly serve more borrowers while keeping risk within guardrails.
In 2018, the credit policy was tightened gradually and consistently throughout the year to respond to investor demand for lower-risk assets, and interest rates were raised several times to react to the prevailing interest rate environment. Over the past several months, we’ve undertaken additional tests around pricing, loan size, and user experience.
Most recently, the credit policy was tightened on certain loan grades and terms, and interest rates were increased for loan grades B-D by a weighted average of 0.57%. Grades D and E saw a few specific changes that are intended to improve investor returns. In Grade D, interest rates went from a range of 17.97%-22.35% to a range of 17.97%-28.80%.
As you know, it’s a best practice to occasionally monitor your overall portfolio to ensure it’s still in line with your investment goals.1 Should you want to make changes to your LendingClub investment strategy given the information above, you can make automated investing changes here and manual changes here.2 As always, please reach out to our Investor Services Team with any further questions
1 LendingClub loan grades are our way of grouping borrowers with common credit risk factors including credit scores, additional credit bureau information, requested loan amount, and other borrower attributes. These categories reflect broad indications of risk, rather than static definitions, and the criteria for a particular grade may change over time. Investors may want to consider information regarding a loan’s grade, purpose, and term (36 or 60 months), and borrower Debt-to-Income (DTI) ratio and most recent credit score (as well as other factors) to help them select Notes and build a portfolio that suits their investment goals and risk tolerance. For more on risks and investment considerations, please see the Prospectus.
2 This information is not intended to be investment advice. LendingClub Notes are not guaranteed or insured, and investors may lose some or all of the principal invested. Notes are offered by prospectus filed with the SEC and investors should review the risks and uncertainties described in the prospectus prior to investing. Investors should consult their financial advisor with questions or if they need additional information. Actual results may vary.