A deep credit risk and profitability analysis of Lending Club's loan portfolio — uncovering default drivers, geographic risk patterns, borrower profiles, and strategic recommendations for risk-adjusted pricing.
Scope of Analysis
Key Findings
Default rates climb steadily from 1.62% (A1) to nearly 40% (G3). A critical "risk cliff" sits between Grade D (19%) and Grade E (26%) — a significant shift in borrower stability.
1.62% → 40%The mid-DTI group (20–40) is the riskiest at 14.38% default. High-DTI (>40) is ironically the safest at 7.40% — a selection bias where high-DTI loans only go to borrowers with flawless profiles.
Mid-DTI RiskiestMortgage holders default at 10.31% vs. renters at 13.87% — a 3.5 percentage point gap that represents a major opportunity for risk-adjusted pricing strategies.
3.5pp GapCredit card refinancing carries the lowest rates (11.70%) while Small Business loans carry the highest (15.26%), reflecting the elevated mortality rate of new ventures vs. debt stabilization.
11.7% → 15.26%$4.18B charged off from $33.9B funded. Loss rates peaked at 18–19% during the aggressive 2014–2015 expansion phase — a cautionary tale of growth-at-all-costs lending.
$4.18B LostIncome is a definitive success predictor. The "Low Salary" group defaults at 23% vs. only 12% for the "Elite" group — an 11-percentage-point gap that should directly inform underwriting criteria.
23% vs 12%Alabama (AL) and Arkansas (AR) lead in credit risk with 14% default rates. Southern states dominate the top 5 riskiest geographies, signaling a need for region-specific pricing.
AL & AR = 14%Borrowers with 10+ years of employment hold $12.1B in loans — the anchor of the portfolio. Borrowers with <1 year receive loans similar in size to those with 5 years — a high-risk acquisition pattern.
$12.1B (10yr+)Live Demo
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Full Analysis
The complete analysis with all code, visualizations, and findings.