Adjustments to invite crediting and loan size increase requirements

Discussion in 'Announcements' started by Julia Kurnia, Jan 6, 2017.

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  1. Julia Kurnia

    Julia Kurnia Director, Zidisha Zidisha Staff

    This week, we made the following adjustments to invite crediting and credit limit increase requirements:

    1. Invitees must have had at least six installments fall due before their inviters receive an invite credit. We introduced this requirement because too many people were inviting people they did not know in order to gain invite credits, then using the invite credits to take out loans before the invitees had substantial repayments fall due. This behavior has caused a decline in the repayment performance of recent invitees. Under the new rules, inviters will still receive an invite credit for each invitee who meets the 90% on-time repayment score requirement, but the invite credit will only be rewarded once the invitee has had at least six installments fall due (i.e. about six weeks have passed since the invitee's loan disbursement). The purpose is to incentivize inviting only responsible invitees who are likely to maintain high on-time repayment scores over the longer term.

    2. The exception that allowed a 200% next loan credit limit increase instead of the normal 150% increase after repayment of loans under $200 was discontinued. The original purpose of this 200% increase exception was to allow more rapid progression to substantial loans at a time when every member started with a small credit limit. Since we now offer the ability to rapidly increase credit limits by making a payment into the Members Loan Fund with the first loan, the exception no longer adds the value it once did, and increases credit risk by facilitating rapid increases for members who have not yet proved creditworthiness by repaying similar amounts. Now, the base credit limit increase is simply 150% for all loans.

    3. The minimum time to increase the next loan base credit limit now depends more closely on the current loan amount, as follows:
    • Loans under $200: 2 months
    • $200 - $499: 4 months
    • $500 - $999: 6 months
    • $1000 - $2999: 8 months
    • $3000 and above: 12 months
    Note that if two months have passed since your first loan disbursement, you may still repay and take out a new loan with your current credit limit at any time. However, the next loan credit limit will only increase if you hold the current loan for at least the minimum number of months listed above. The purpose is to help ensure those taking out large loans have proved creditworthiness by genuinely investing smaller loans for their intended purposes and repaying them with revenue generated over time.

    We'll continue to monitor credit risk closely as our community grows, and will continue to adjust these parameters as needed to ensure that our lenders are repaid and we can reliably facilitate loans for responsible members over the long term.
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