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Since starting with Lending Club in the spring of 2009, my investment criteria has changed significantly. Prior to 2012, I was invested in mostly medium to low risk loans in the B-C grades. Last spring, after reading Peter Renton’s Lend Academy post on how he planned to invest his money in 2012, I quickly changed my perspective and began doing my own research into what criteria would provide me with a potentially higher return, for a limited increase in risk. UPDATE: Peter has released his 2013 Investment Criteria.

Utilizing Lendstats, I spent countless hours manipulating and testing out various filters combinations culminating in my current two filter sets below. Both of these filter sets have been structured in a way that eliminates any duplicity in note selecting to avoid concentration in any particular note. Links to the below criteria, effective through 12/2012 are available below.

Lending Club – Primary filter, lower risk

Loan Grade: C, D, E, F, G

Home Ownership: Mortgage, Rent

Inquiries: 0

Public Records: 0

Delinquencies: 10 Months since last

Monthly Income: >= $6,000

Minimum Loan Amount: >= $5,000

Credit History: >= 10 years

Job History: >= 6 years on the job

Loan Purpose: Credit Card, Debt Consolidation, Home Improvement, House Purchase, and Major Purchase

States: Exclude CA, FL, MI, NV, WA

Lendstats: Primary Filter

Lending Club – Secondary filter, higher risk

Loan Grade: D, E, F, G

Home Ownership: Mortgage, Rent

Inquiries: 0

Public Records: 0

Delinquencies: 10 Months since last

Monthly Income: >= $3,000 < $6,000

Minimum Loan Amount: >= $5,000

Job History: >= 6 years on the job

Loan Purpose: Credit Card, Debt Consolidation, Home Improvement, House Purchase, Major Purchase, Vacation, and Wedding

States: Exclude AZ, CA, FL, GA, HI, NC, NV, RI

Lendstats: Secondary Filter

Some final notes

While I am not a statistician, I am fully aware of the limits of this random “method testing” and would strongly recommend anyone do their own research into what investment criteria you would be comfortable using. Ideally, a brute force method of processing and calculating every possible combination and aggregating the data would be ideal, but I don’t have the technical expertise or programming knowledge to accomplish that task.

Additional statistical analysis can be done at the following sites:

Nickel Steamroller: Great website to check investment methods against, as well as have your current portfolio analyzed

Interest Radar: Provides comprehensive investment tracking, strategy development, and analysis

Be sure to check out my Lending Club investments to see my updates on my returns!

What filters and statistical analysis have you found successful in your peer-to-peer investments?