Here's how online lenders figure out whether you're a good borrower

Renaud Laplanche, lending club, sv100 2015Brian Ach/GettyRenaud Laplanche

Online lenders operate in a different realm than traditional banks, and big data is a big part of that.

Speaking at at the Economist’s Buttonwood conference in midtown Manhattan on Tuesday, Lending Club CEO Renaud Laplanche explained what factors go into determining creditworthiness online.

“We don’t know what our customers look like,” Laplanche said at the event.

Speaking with Business Insider after his on-stage appearance, Laplanche said determining the fraudulent applicants from the real customers is a key part of Lending Club’s business model.

And it uses all types of data to determine real consumers from fraudulent profiles, and to figure out which applicants are creditworthy.

  • Fraudsters use automated inputs to speed up loan applications online. Laplanche said that the faster an application is being processed, the greater the likelihood it is a bot and not an actual person.
  • Timing is key. Laplanche said on stage that the kind of consumer Lending Club wants to lend to is more likely to submit an application during regular business hours. If someone applies at 3AM for a loan, they likely pose a higher risk.
  • Which browser you use and which email service you use could make you a greater liability. Laplanche wouldn’t say which browsers and email addresses are most suspect, however.
  • Because business loans are regulated differently than from consumer loans, Lending Club can factor Yelp reviews and Google search trends to determine creditworthiness for small businesses.
  • Watch the caps lock! Another lending industry executive, who asked to remain unnamed, said his firm determined consumers who fill out applications IN ALL CAPS have a higher likelihood of default.

That said, this checklist could change entirely before the year is out. Laplanche said “hundreds” of factors like the ones above go into determining applications — not just consumers’ credit scores.

“Every six months we build a new underwriting model,” he said.

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