Monday, April 03, 2006

Advice to borrowers who are writing loan listings, updated

0.Spellcheck and good grammar are important – this can seem silly, but people are put off by shoddy-looking borrower statements – ask your group leader for help if necessary.

1.Clear, detailed descriptions of what you need the money for, what kind of significant debt you already have – and, this is important, an explanation of how you’ll be able to pay it back:

An example of an acceptable, though certainly imperfect, listing:

I am a 30 year old mother of 2. I lost my job of 6 years at Bellsouth in May of 2005. I have currently been at my present job since August of 2005. This job does not pay as much as Bellsouth. In the process of me losing my job, I got involved in some payday loans. I have been only able to pay the finance charges on these loans as I have so many of them. This situation has caused me to fall behind on some more important bills as these payday loans hit my bank account directly. I am issuing out about 800 dollars a month for these payday loans. If I could pay off these loans, I could save an extra 600 dollars a month to catch up on other important bills. I am not a bad person. I only made some desperate decisions at a desperate time. I need to pay off the following: Sonic Cash (600.00), Ezpaydaycash (375.00), Cash Now Newengland (750.00), Cash Today (289.00), Cash In A Wink (675.00), Nationwide Cash Advance (375.00), Fast Cash (325.00), AIP (279.00), Cash Zip (288.00) and 1 overdue mortgage payment of 1100.00. I make 30160.00 yearly plus an extra 500.00 a month in child support. All of these payday loans come due every 2 weeks and the finance charges range between 25.00 - 175.00. Please help.

Some excellent advice from GogMagog:

In your loan, don’t dwell on your problems, talk about your solutions. Briefly mention your credit problems, but tell them to look at your profile for more information. Lenders look at loans in a list of dozens. Place something like this near the beginning of your loan… “I have had problems with debt in the past (see my profile), but this is how I plan to make it right.” You are taking a lender’s money, they want to know it is in good hands. You need to SHOW them you have a plan.

  • “I have 2 credit cards that are at 24% and 30% interest. This 18% loan will help me reduce that rate.”
  • “I have a car loan that has a $200 payment, by refinancing with Prosper, my monthly payment will drop to $150 a month.”
  • My car broke down and I need a new one. My bank won’t lend me $3,000 for a used car. They only loan $5,000 and above, and the dealer financing is at %25!
  • I have a payday loan for $500 that I just can’t afford to get rid of. It costs me $30 every two weeks to prevent default. I need $1,000 to pay off the loan, and give me a cushion so that I don’t have to live from paycheck to paycheck.

2.Details on your employment:

If you have an ebay userID w/lots of sales, post a link inviting lenders to contact you through your ebay store/ID.

Your place of employment doesn’t have to be flashy or impressive – just honest and full of confirmable detail. For example, saying that “I work at a big firm in Atlanta” is much worse than providing as much of the following information as possible (fictional examples):

-that you work as a secretary at Ling Architecture, LLC

-that your firm’s web page can be found at

-that your company email address is

-that your extension at the company is x8765

-that someone can call you at the main number listed on, and ask to be transferred to you by name

-that your salary is $28,000

-that your paystubs (w/social security number crossed out) are either available upon request, or already posted on a web page reachable here

-that someone in Human Resources at Ling Architecture (or failing that, your boss) will let your group leader to call him/her (again, through the main number listed on the website) to confirm your employment and salary.

3.Disclosure of past credit history woes, and explanations of what happened. Many borrowers w/bad credit got there due to bad luck, rather than spending up to their credit card limits on expensive luxuries and then going bankrupt. If you’ve gone bankrupt before, please don’t lie about it – bankruptcy filings are publicly available information on the web, and people are frequently willing to accept there were (medical) circumstances beyond your control (if, for instance, your credit report says that you wrote off several large hospital bills), or that you’ve turned over a new leaf (if your credit report shows no lates in the past year or so).

-Perhaps you can post the negatives and derogatories summary portion of your credit report, anonymized, of course. (See this post for more detail.)

4.If you’re willing to, give people your phone number and encourage them to call you (within reason) – it makes them less likely to worry that you’re not Mary Smith, but merely a 14 year old hacker who someone else’s identity to borrow on Prosper. In my experience, people feel a greater sensation of connection once they actually speak to a borrower (as opposed to just sending emails back and forth).

5.Your profile should be used for two things:

One, to give enough information to make people comfortable w/you as a borrower, and to put a human face on what can otherwise be a very asocial process.

Two, because you can change your profile at any time, but you can’t alter your loan once posted, you should make your profile a question and answer page for lenders. THIS IS VERY IMPORTANT – within your loan listing, say something at the end like: Please go look at my profile here (include a link to your profile) to see questions and answers from other lenders. Do so – if a lender asks you a reasonable question, answer it and post the Q&A in your profile.

6.Overall, do as much of the lenders’ due diligence for them as possible:

-if you’re a college graduate, provide an alumni association phone number where they can confirm that you graduated from that college.

-if you want a loan to fund your education, include a transcript (again, w/ your account number and social security number crossed out).

-if you want to post hospital bills or payday loans (again, w/sensitive information crossed out) that express your need, do that.

-if you claim that you have plenty of money, but want to take out another cheap prosper loan to fund a real estate project, include a picture of a bank statement after removing account info, home address, etc.

-or, maybe include the address that you’re working on fixing up.

7.Technical issues:
Prosper loan listings and profiles limit the number of images you can attach. Say you need more, but don't have a web site to put them on. One free way to post images (that I've never used, and have no affiliation with, other than googling it up first)

8.Special considerations for E/HR/NC folk, but relevant for everyone:
Given the new rate cap of 23.75%, you'll have to really be thorough if you want to get funded. In particular, you should start out with the smallest loan possible -- many lenders worry that people will come onto, take out a huge loan, and then default -- if a borrower's credit is poor to start with, there is little incentive besides personal ethics for someone not to do so. If you can demonstrate on confirm your ethics over the Internet somehow, or use a decent proxy (I confirmed that one guy was a priest, for instance) for it -- great -- however, most people will be unable to do so. As a result, you have to think seriously about the size of your loan -- make it as small as possible, while still helping you meet your original purpose (and preferably have enough left over to set aside as a cushion for one month's payment).

9. The lender’s thought process…more closing words from GogMagog:

Lenders want reassurance. There is a persistent myth that people with bad credit squander their credit frivolously on shopping and beer. This is a persistent thought, mostly because EVERYONE knows a deadbeat like this somewhere in their lives. A clearly worded, properly spelled and capitalized, response to a question goes a long way to making the Lender feel that their money is safe.

Some Lenders perform more checks, on their potential loans than others do. These diligent Lenders are crucial to the Prosper system. They want to make sure their money is in the hands of responsible, though financially strained people. They are the ones who send you messages about your loan, or yourself, asking for more information. They also tend to report to Lender groups and mail out lists of their findings.

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