Cracking the
Loan Code
Motivation
Access to credit can help keep your child in school, get you a car to drive to work, or let you own your own home. Nearly 3 Billion people in the world don’t have access to loans. Over the past twenty years approaches like micro-lending and peer-to-peer lending have created mechanisms to make loans available to a segment of the population that would previously not have had access to credit. Even small loans can have a major impact on your quality of life. One of the popular new options is Lending Club, a peer-to-peer lending platform and our project team wanted to find out what you can do to improve your chances of getting a loan with a favorable interest rate on this platform.
Helping Applicants Lower their Rates on Lending Club.
A CS109 Final Project by Dylan de Waart and Tim Maounis
Project Goal
To determine the interest rates offered on a loan application, Lending Club calculates a grade to approximate the application's risk. By achieving a higher grade, you will receive more favorable interest rates. Unfortunately, how that grade is calculated is confidential. Our project team aimed to crack their proprietary formula and share which input variables are most important in their model and how they impact your interest rate. This will allow you to improve your chances of getting a more favorable interest rate.
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Please note while grading the limitations of having a two person group as compared to the normal 3-4 person group.
Disclaimer
This is a student project. The results of this study are for educational purposes only and do not constitute financial advice.
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