We’ve launched loans to everyone who’s eligible

Making Monzo
82

I have to admit, I find Monzo’s lending criteria a little odd… I understand their position and want to loan to the lowest perceived risk possible.

I just thought I would fall into that category.

I spent quite a lot of time working in credit risk rules design so I understand the area quite well and appreciate that rules engines can be tweaked on a daily basis (or even more often in some systems I’ve worked on!).

It did come as a bit of a surprise though that I am not eligible for anything - I used to be eligible for £1000 but now nothing. Income is decent, outgoings low in comparison, some savings with Monzo (more elsewhere), credit history very good, and now nothing from Monzo. I would honestly have put myself in one of the lowest risk categories based on my experience in the industry.

I had a similar experience with their overdraft for a long time until I questioned it and pressed further on challenges - turns out there was a system conflict indicating eligibility and no eligibility at the same time in two different places and when this was resolved I got the full £1000 available… this does make me wonder about some of the reports here of no offer as a surprise…

There’s no clear way of indicating income and expenditure in the app (though I appreciate some of this can be returned via CRA which is generally more reliable) - it also doesn’t provide the facility to apply for a loan on the basis of consolidation which should write off an element of outgoings.

A feature to watch for sure :slightly_smiling_face: let’s hope the marketplace extends into credit too.

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83

Has anybody found a way to change the lending answers? Curious to know if I become a pro footballer I’m eligible for £15,000.

For the people with no/low and high elsewhere are you using Monzo just for monthly spend or use it as your main account with salary paid in?

84

Is that range correct as there have been quotes referred to in this forum with lower and higher rates:

@phildawson 3k over 2 years at 26.8%

@harryru £15k at 3.2%

Both rates are outside the range referred to in the opening post in this thread.

:thinking:

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85

Id assume the headline 3.7% is the rate at least 51% of those offered loans get. But suggests this is the lowest APR but it isn’t.

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86

Just checked out of curiosity (I don’t do loans or overdrafts, was taught from early age to save for purchases) and I am eligible for £15k @ 3.7%

I’m one of the 51% then :grinning:

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87

I was also taught the same thing, and have been lucky enough to have never been in debt at 28. Unfortunately this means I have absolutely no credit history and do not show up on any credit reports :see_no_evil:🤦 time to get a credit card I think!

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I’m guess it’s not been rolled out to me, as I’ve looked at my Credit Karma score and I should be good (I don’t need a loan, just being nosey)

09

89

Hi everyone,

I’m Amy, the Product Manager on Loans at Monzo :wave:

Thanks so much for your feedback, it’s really valuable for helping us to develop the best possible experience for Monzo customers.

I know we’ve taken a little longer than usual to respond, so I wanted to reassure you that we are reading your comments and will be back with a bit more information about eligibility for our loans and some answers to some of your other comments today :slightly_smiling_face:

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Karma isn’t a lender so this score is pointless, its own website says the score is not seen by lenders.

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Always useful for building credit history, however, not everyone acts responsibility once it is in their hand and see it as free cash :frowning_face:

My folks have never had credit cards. I was taught the Build your credit history route by work colleagues at the tender age of 17, and so got my first at 18, NatWest Access “flexible friend”

Paid in full every month, didn’t spend what I didn’t have, and have only paid interest once, back in the 80s, when my paper statement did not arrive and, rather than question where it was, I found the next one that arrived had interest on £12.50 worth of Shakin’ Stevens’ tickets for my brother lol.

It was that lesson that introduced me to the convenience of Direct Debits. No missed payments on any card since.

I currently hold a 0% purchase card, for emergency use only, and Mastercard and Visa credit cards that are for credit history purposes. Small purchases, paid IN FULL every month.

Remember, credit history is important, credit score not so :smile:

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92

Hi Amy :wave:
Is it possible to add how often the loan check will happen. It appears to have cached, but for how long :thinking:

As I’m checking now it’s saved my answers and just presents the same value/APR.

I can’t seem to change the inputs if my circumstances change.

Also it would be good to have an indication of how long the quoted amount/APR is valid for.

Importantly it needs to be clear if Monzo improve or modify its criteria code based on feedback that I can get a fresh quote on the loan page like a “we’ve updated our lending criteria/algorithms check again how much you could now be loaned” etc

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Would you be able to send me an email at daniel@monzo.com and I’ll double check everything is working as expected.

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Hi everyone,

Thanks again for your feedback, it’s been so useful to hear your thoughts after having taken a look at our loans.

As part of our efforts to always be transparent, we try to give each person a reason as to why we can’t lend to them, without sharing any information that we’re not allowed to for legal or security reasons. We can see we haven’t quite nailed this, so we’ll put some more effort into thinking about how we communicate these reasons more clearly on the screens you’ve been sharing.

Deciding who we can responsibly lend to is a pretty complex job. We look at a lot of data and use it to work out if we think someone can afford to borrow, as well as how likely we think it is that they can pay us back. It’s important we get this right, to make sure we protect our customers and our long-term business.

When we’re making this decision, we take these things into account:

Credit reference agency data

We currently use TransUnion as our credit reference agency and you can see a copy of your data using CreditKarma).

This includes details about other borrowing you might have, how much you’ve used it and whether you’ve always paid back on time.

We have some “hard rules” based on this data that help us to make sure we lend responsibly. We can’t detail all of our rules for security reasons. But as one example, if you’ve had a default in the last few years then we don’t currently offer you a loan.

If you pass these checks, we use this data to create a score we call the “Monzo loan score.” We use this score to decide if we can lend to you and what rate we can offer you.

Your income and expenditure data

We need to make sure that you can afford to pay back the loan we’re offering you, so people don’t get into unmanageable debts. To do this, we might ask you for your income and then verify it with data we get from the credit reference agency. They estimate your income based on information from all the bank accounts you have.

We then use a model to decide if we can lend to you. This looks at:

  • national statistics
  • your age
  • where you live
  • your income
  • your mortgage

and other borrowing commitments.
Along with these factors, we also look at whether you actively use your Monzo account or Joint Account and your employment status.

We hope this gives a bit more clarity as to how we decide whether we can or can’t offer you a loan. It’s not an exact science and we’re constantly trying to get better at it so that we can offer more of our customers a loan with us, while still lending responsibly.

We’ll keep reviewing our processes and listening to your feedback to help us make this as effective as possible.

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95

Thanks @amydicketts

Whenever lending is brought up I keep asking the below question (including earlier in this topic) and it seems like a few others are wanting the answer to this too.

Can you help clarify this as well please:

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96

Daniel has just replied to me to say that 3.7% and the 20.4% represent the rate that at least 51% get for those specific loan ranges.

Its just makes it look like a range of 3.7% (min) to 20.4% (max) covering £1 to £15k if you read it quickly. It could be clearer that you may receive higher or lower than these representative values.

Should be something like:

We offer loans of:

£200 to £7,499 with 20.4% APR representative

£7,500 to £15,000 with 3.7% APR representative

At least 51% of customers will receive these APR rates. You may be offered a higher or lower APR based on your personal circumstances. We’ll tell you the exact rate you’ll pay before you apply.

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97

It’s not unusual to be eligible for revolving credit (where there is no fixed repayment plan e.g. overdraft, credit card) but not be eligible for the equivalent on a fixed term if the fixed term is sufficiently short that our affordability logic doesn’t think you can afford it. In addition to this we are more conservative on loans than on overdrafts (our credit risk models are trained on a min £3k limit).

Our loan decisioning is using our internal model for credit risk trained for giving out loans – we are currently doing a lot of work on overdrafts to move it across to our “new platform” and use an internal model for this as well. Once this is complete many people that are not eligible for overdrafts but are eligible for loans should become eligible for overdrafts.

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98

Including joint accounts? :wink:

99

Unfortunately not, we’re only offering loans on personal accounts right now.

100

We’re not offering Spread the Cost loans right now so we’ve turned it off in the app :slight_smile:

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How does it work if you use your Joint Account as
your main account?

My CK score is excellent, but I’m not offered a loan based on income/expenditure stats (for clarity, I don’t need one, it’s purely curiosity).

Do you take the JA into account when coming to your decision?