LendingClub tightens credit for riskier borrowers in a sign of things to come - San Francisco Business Times

LendingClub is among the lenders preparing for a weakening economy by tightening credit for customers likely to have trouble keeping up with their bills.

“That’s where we and everyone in the industry are seeing the most stress on consumers. We’ve done some pretty extensive tightening,” LendingClub Chief Financial OfficerMore consumers struggling with higher inflation are turning to their credit cards more often to make ends meet. Plus, interest rates on card balances are rising rapidly as the Federal Reserve seeks to tame inflation.

LendingClub, led by CEO Scott Sanborn, kept 33% of its loans on its books in the third quarter, above the 20% to 25% range that the company had previously expected. Although LendingClub makes almost three times as much on loans it holds on its books rather than sells to investors, holding onto the loans is capital intensive.

His comments offer a glimpse into what lies ahead since banks, fintechs and other financial institutions rein in their lending when they perceive greater risk of not getting paid back in a timely fashion.

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