Almost one third of Lending Club loans are not income verified

New analysis from Bank Innovation has shown that almost one third of Lending Club’s outstanding loans (nearly 82,000 loans) from the first nine months of last year are classified as income “not verified”; a high number compared to industry standards. A similar number of loans were classified as “verified”, with the remainder shown as “source verified”. The data comes directly from Lending Club as they recently released a significant amount of data for analysis, however the company has not commented on the findings.

Lending Club Corp. seems to be facilitating many loans that do not include income verification.

According to a Bank Innovation analysis, nearly a third of Lending Club’s loans outstanding during the first nine months of 2015 are classified as “Not Verified.” That amounts to nearly 82,000 loans. Another 43% of Lending Club loans, or around 126,000 credits, are income “Source Verified,” while 28%, or about 82,000, of LC loan borrowers have had their income “Verified.”

Lending Club has recently made a vast quantity of data available for analysis. The data offers a unique window on marketplace lending and underwriting practices at Lending Club, a leading alternative lender.

A “Not Verified” share of the portfolio of 29% by volume of accounts is high, compared to most consumer lenders. (The “Not Verified” loans make up 22% of the portfolio on a dollar basis.) However, the average debt-to-income ratio on these loans is 18.47 compared to 19.10 for the entire Lending Club portfolio. A DTI in the 18 range is low, but the average income on “Not Verified” loans is about $68,600, compared to approximately $76,000 across the whole portfolio. Higher income tends to imply better credit performance.

Lending Club did not respond to a request for clarification.

A total of 2.8% of the “Not Verified” loans have either been charged off or are delinquent.

Lending Club [ticker: LC] has a market capitalization of $2.8 billion. LC had about $4.4 billion of loans outstanding at the of the 3Q15.