Description Level

The description entered by the borrower to request the loan is probably the most debated subject in P2P lending the internet. You can find endless advice about what to avoid in the text: bad spelling, mismatching information, contradictions with the credit report, lack of explanations, low drive to defend the need for money.

But is this based on facts, or just an attempt to be zealous and diligent but only based in intuition and common sense?

Interest Radar’s Description filter can aid you in answering this question. Here is what each value means:

  • None: when the description entered is blank or the length of the text entered is less than 10 characters
  • Short: when the length of the description is 10 or more characters, but less than 400
  • Full: when the length of the description is 400 or more characters

If you’re used to the Quick Chart by now, you can see how the length of the description affects the loss rate with this:

Loss Histogram

Apparently, too much description is a bad sign. As a matter of fact, loans with no description will perform as well or better than the ones with description.

A word of warning though: LendingClub doesn’t include in its public database of loans the answers to questions by borrowers. Only the initial description, and the additions to the description, are shared in the file.

If you don’t feel comfortable lending to a stranger without first reading their story and making sure it has a strong and consistent explanation for the need of money, you can always review the description clicking on the loan number in the Current Listings list before investing.


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