Each P2P site has its own rules and approval criteria, and an application declined by one doesn’t necessarily mean that all the others would reach the same decision. However, the industry-wide denial rate is about 90 percent, says Business Week.. Applying is probably not for the faint of heart.
The floor on credit scores varies from site to site, but the big players tend to exclude those with FICO scores below 640-660, according to a Yahoo! Finance report.
To get the very best rates, applicants need a stellar credit score and a faultless credit report that shows a long and stable history of managing a range of significant accounts. Income and debts are also considered. Applicants who can’t meet those exacting standards should expect to pay a higher rate than top-tier borrowers.
The P2P industry is dominated by two big players, Lending Club (no relation to LendingTree) and Prosper, and they don’t do business in every state. For example, Lending Club does not operate in Idaho or Nebraska, but Prosper does. Prosper does not lend in Maine, Iowa or North Dakota, but Lending Club does. However, new companies are entering the market, and it’s certainly worth including those in any comparison shopping exercise. Consumers should understand that those on the fringe of financial services may not be trustworthy, and should check with the Better Business Bureau and conduct an online search for complaints before making a commitment. Obviously, it’s also essential to fully understand all the loan agreement’s terms and conditions.