ali
Member of DD Central
Posts: 313 
Likes: 311
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Post by ali on Mar 3, 2017 12:40:04 GMT
kristjan can you explain how the minimum interest rates work, please. I assumed it was based on some combination of the buyer/seller credit ratings and probability of default, but that doesn't seem to be the case with QA036 and QA037 having the same ratings and default rates but different minimum interest rates: | Invoice | Rating (buyer)
| PD (buyer)
| Rating (seller)
| PD (seller)
| Minimum interest rate
| | INV-0006 | A | 2% | B | 7% | 11% | | 4609 | A | 1% | BB | 2% | 9% | | 1552 | AA | 1% | BB | 7% | 8% | | QA036 | AA | 1% | B | 8% | 9% | | QA037 | AA | 1% | B | 8% | 8% |
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Post by kristjan on Mar 3, 2017 13:11:57 GMT
The ratings and default probabilities are calculated and issued by credit agencies based mostly on publicly available information. Our minimum rate takes into account more information than is publicly available - data that we've gathered from the seller's bank account statement, the relationship with the debtor and public information found elsewhere etc.
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ali
Member of DD Central
Posts: 313
Likes: 311
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Post by ali on Mar 3, 2017 13:49:01 GMT
The ratings and default probabilities are calculated and issued by credit agencies based mostly on publicly available information. Our minimum rate takes into account more information than is publicly available - data that we've gathered from the seller's bank account statement, the relationship with the debtor and public information found elsewhere etc. Thanks kristjan. I'll need to think about that. I'm not entirely happy with a platform deciding for me that a loan is low-risk. Perhaps best if I just increase my bid limit.
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Post by kristjan on Mar 3, 2017 13:58:21 GMT
That's completely fine. It is up to each investor to tailor the bid size and the bid rate according to their risk appetite.
The reason we set the rates based on more information than just what is on offer from credit agencies is because credit ratings for small companies with a short history are based on a small amount of data. For small and new companies, the bank account statement often offers more insight into what is really going on than just the annual accounts (which are very thin in the UK anyway, at least until you reach 5 million in annual sales)
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