Credit Risk Strategy



An earlier article in this category constructed the profit model as an equation.  However, in certain circumstances, it is also possible to use a diagram to achieve the same goal.    

A diagrammatic profit model is a useful communications tool when the intended audience is non-technical and may feel uneasy with equations.  On the down side, although a diagram can highlight the interactions between profit models it can’t easily show the size of each interaction.  This means that it doesn’t facilitate accurate calculations in the same way that an equation would.    

In practice, therefore, the two formats compliment each other.  As a piece of analysis progresses though its life-cycle, the dominant format of the profit model will change.  

Usually, an analyst’s first step would be to draw a draft profit model in diagrammatic form.  This helps the analyst to identify the key profit levers and the…

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Realtor Ron W

Is this a fair Home Mortgage loan?**

We’ve told you that lenders gauge your risk based on your FICO® scores. We can show you the rates you should expect based on your FICO® scores. If the loan offers you are receiving have higher rates than your FICO® scores justify, then tell your lenders.

Mortgage rates as of June 7, 2012

FICO® score

APR [?]

Monthly payment *



















Location Loan amount * Estimated average over the life of the loan. Payments may vary. Y30FConfCombMtg|Y15FConfCombMtg|Y7ARMMtg|Y3ARMConfCombMtg|Y1ARMMtg| Y30FConfCombMtg Source: Informa Research Services

*Curiosity of   myFICO® is the consumer division of FICO found at

Remember:  “Pictures without the information is never the whole and true story ~!” Realtor Ron W

Visit me athttp//…

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Money Provides Freedom

According to the American Bankruptcy Institute, about 1.6 million people filed for personal bankruptcy in 2010. Sixty five percent of filers chose “income reduction” as a reason for filing. If you file, your FICO credit score will definitely take a hit. For instance, you can expect a reduction of up to 240 points if you have a 780 score and a reduction of up to 150 points for a 680 score.

What and how much someone in bankruptcy keeps depends mostly on where he or she lives. Here are five assets that may be protected in bankruptcy:

  • Home: Holding on to your home depends on the state you live and the equity in your home. In general, if the owner has no equity, he/she can keep it as long as payment stays current. For filers with equity, most states have an exemption – money from the trustee sale of the home stays…

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Interest Radar Blog

LendingClub doesn’t disclose the exact FICO score of a borrower, but instead group the scores in ranges. In October 2012 the ranges changed from 6 to 42, becoming much more granular. In Interest Radar, the available ranges to filter loans are 5: 660-679, 680-714, 715-749, 750-779, and 780+.

Debtors with scores lower than 660 are turned down by LendingClub.

In the mainstream credit industry, a FICO of less than 679 are considered below average, while above 750 are considered prime.

But in P2P lending, one must understand the average borrower coming to shop for credit is different. While there may be many creditworthy people hearing about P2P lending and coming for an unsecured loan with a 7% annual interest rate while they could obtain the same loan in a bank for a higher interest rate, there is a huge proportion of borrowers coming to P2P lending because they are being…

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