Tuesday, March 28, 2006

Advanced listing strategies for borrowers, 2nd in a series of...2?

Not so advanced for many Prosper.com users, but a way to reveal information to lenders w/o risking identity theft (which I think is simultaneously harder to completely prevent, and harder to actually accomplish, than is commonly believed):

Lender A wants identity confirmation -- well, I'm not talking about Lender A, because ID confirmation techniques you can get elsewhere -- I'm talking about Lender B, who wants to know if you're HR because you got overwhelmed w/student debt and had to take care of a kid at the same time, but have no outstanding liens, or if you've gone bankrupt twice in the last 7 years, and planning for a three-peat as soon as the law lets you.

Here's the thing -- if you pull a credit report, there will typically be a summary section about negatives, public delinquencies/liens/bankruptcies, etc. Almost w/o exception you account number, personal info, etc, will not be present (and can easily be crossed off if they are).

Some examples:
Other negatives

Negative factors

These sections are highly useful for the lender, and also relatively safe for the borrower -- nothing, ever, is perfectly anything. Except maybe math. Maybe. Someone could obviously photoshop something together, etc...

Strategy Ratings:

Personal Factor: An advanced advanced version of this strategy, do NOT repeat unless you know what you're doing: Because a credit file or image could be forged by someone w/computer skills and time, I asked one of my tech-savvy borrowers for better confirmation. I VNC'd (basically, a way to remotely view someone else's computer desktop) into his computer (w/appropriate security settings) , while he logged on to Equifax's site to load his credit report, then clicked to the relevant sections. Not foolproof, but raises the barrier for fraud. (He could have set up local copies of fake Equifax web pages on his computer, etc, etc, but at some point you have admit that no one's out to get you -- you're just paranoid.) Variations on this include webcamming while watching the borrower log in (focus on screen, not borrower), etc.

Further thoughts:Perhaps also pulling various summary sections, like total utilization, etc, that give overall statistics w/o information disclosure.

Persistence: High-ish, until prosper starts offerring an enhanced credit check service (perhaps pulling the two sections above) for the lender from willing borrowers. (This could be a big value-add.)

Conclusion: If you haven't already, get a free credit report by going to http://www.ftc.gov/bcp/conline/pubs/credit/freereports.htm
and then clicking on the link to the free annual credit report site. Have certain sections ready for lenders, or even volunteer it in advance. The three bureaus all have different free report styles -- not sure which is best for this purpose. Anyone else?


At 8:51 PM, Blogger cellardoor said...

To reiterate -- I did not do so until after I had already allowed the user to join my group based on other, non-Prosper prohibited question-answer pairs. Therefore, I did not violate the following:
"Group leaders may not obtain or use a credit report, require prospective members to provide a credit report, or to provide authorization to obtain a credit report, as a condition to group membership."

Of course, I've decided to basically go inactive as a group leader for any future borrowers (who I don't know from off-site) who want to join, since I suspect that once Prosper gets better at drafting prohibitions, they'll exclude my other methods of dealing with this restriction.

Speaking of bad drafting, has anyone fixed the TOS terms that, because of drafting, is frequently misread as a prohibition against simultaneously being a lender and borrower?

Clarification re: additional non-friend members -- at least until prosper starts presenting aggregated derogatory/recent 90 day lates/last late type info at the very least as an option for borrowers...


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