Lifehacker, a site giving productivity tips to geeks, (ok, perhaps others as well), has an interesting story on one persons experience with Debt on credit card. They put their debt up for sale on Prosper. So you have 5,000 in debt, running at APR of 15% or something, and you get 9.8% on Prosper from a group of individuals, the world becomes interesting. How long before the price of this debt is reduced due to better "Social Ranking", ie on Rapleaf, or eBay? I think we may be seeing the world of Micro-lending re-engineering the world of traditional lending. Instead of just "Bad Debt", perhaps people will respond to "Bad Rep", and pay on time? I mean who wants to look bad in the eyes of friends and colleagues?
Addendum: The Social aspects of Prosper surface the Risk Assumptions that underpin the Risk Rates and how they are applied to individuals with various formal credit rankings. This means that Prosper is effectively acting as a Prediction Market for risk.
Tuesday, March 20, 2007
MicroLending and MicroCollections?
Lifehacker, a site giving productivity tips to geeks, (ok, perhaps others as well), has an interesting story on one persons experience with Debt on credit card. They put their debt up for sale on Prosper. So you have 5,000 in debt, running at APR of 15% or something, and you get 9.8% on Prosper from a group of individuals, the world becomes interesting. How long before the price of this debt is reduced due to better "Social Ranking", ie on Rapleaf, or eBay? I think we may be seeing the world of Micro-lending re-engineering the world of traditional lending. Instead of just "Bad Debt", perhaps people will respond to "Bad Rep", and pay on time? I mean who wants to look bad in the eyes of friends and colleagues?
Addendum: The Social aspects of Prosper surface the Risk Assumptions that underpin the Risk Rates and how they are applied to individuals with various formal credit rankings. This means that Prosper is effectively acting as a Prediction Market for risk.
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