Originally Posted by
JB@Squirrel
You guys are fast! It was one loan of $33,000 secured over a house where his business has gone under and took the house out too! It was a C grade. It had been in arrears for a while so good to write it off. We'll still look to recover what we can.
In the early days we're going to have swings like this, but they'll decrease and the reserves will grow faster.
The book is now at $10m so we are reserving around $16,000 per month.
In the first 6 months after launch (our first two cohorts) we had most of the write-offs. This is the biggest single write-off but the arrears rate is stable and declining as that part of the book runs off. We know the intimate details of each write-off as there has only been 6 totalling $100,000. We review every default against policy to identify policy/process weaknesses and then close the gaps. More recent cohorts are performing very well with next to no arrears and no surprises.
Defaults tend to spike around 12 months. Earlier then that is usually fraud related and we're not seeing any recent defaults which is good. Our arrears rate is very low at 1.70% overall and 2.80% on the older book.
What's working really well for us now (as we've evolved and learned and adapted) is that 100% of bank data comes to us electronically, we have comprehensive credit reporting, multiple credit bureaus, and tighter policy around self-employed and some migrant segments based on what we've observed in the book. We are constantly looking at ways to improve our credit decisions and are looking to publish more data to the web site.
Cheers, JB