At first, I wasn’t even sure Prosper could help someone like me (for those unfamiliar with Prosper, it is a people-to-people lending site). I tried going to banks before to try to consolidate our debt, but they fell short of laughing at me. We had too much debt and not enough income. The appeal of Prosper, though, is that it is regular people funding your loan. They have the ability to see the reasoning behind the numbers and not just the numbers.

After taking some time reading about Prosper, I made the leap and created a loan listing at Prosper. In seven days, I had a fully funded loan for $3,500 at 9.9%. A total of thirteen lenders contributed to my loan.

If I had to do it all over again (if our situation was the same), I would. It was nice to have a debt payment that was the same amount every month. They even automatically withdrew it from our account! There was no worrying about our rates increasing and I knew my money was going to regular people. I didn’t blog too much about that loan after it was funded because it was on auto-pilot for repayment. That was nice.

If you are thinking of trying Prosper.com for debt consolidation, here are some of the tips I’ve written:

Tips for Using Prosper for Debt Consolidation
My List of Tips for Listing a Loan on Prosper
Resources for Prosper Borrowers
Reader Question: Is Prosper.com Trustworthy?

As with anything, always learn as much as you can. I read about Prosper for months before I finally decided to list a loan. I also talked to others who were already involved with them.

If you have any questions about Prosper.com and my experience, feel free to ask in the comments or contact me.

I know for sure that two of my Prosper lenders stop by from time to time. I’m not sure if anyone else does. In any case, if you are reading and were one of the lenders on my loan…thank you.

Thank you for believing in me and what I’m trying to do here. It meant a lot that normal people thought I was worth a shot because the banks sure didn’t think so back then. I think sometimes just the fact that someone believes in you helps you to succeed. In this case, you believed that I would pay back what was borrowed and you trusted your hard earned money with me.

Thank you again!

(For those interested, you can read all about my Prosper Experience in my archives.)

It’s hard to believe a year has already passed since getting my loan. I’m glad that regular people earned some interest off of my loan and I can’t thank you enough for believing in me and trusting me with your hard-earned money.

Thank you.

If you are interested, you can take a peek here.

You also may want to spend some time reading some of his articles. There’s some good stuff over there.

Without further ado, here is my interview with pensioner…

You joined the Prosper community in July of 2006. What made you decide to join Prosper?

Prosper listed 1000 loans that could be had for rates up to 29%. I was intrigued to see if I could lend money at more than 20% to folks that would pay me back 95% of the time.

You have invested $750,000 in Prosper. When you first started lending at Propser, what were your expectations as to how much you would lend? If it has changed from when you first started, why did it change?

My initial thought was to put in $10,000 as a test, to see if I could lend at high rates to people that were likely to pay me back. I was thinking that I could put in several hundred thousand or more. I quickly decided to put in about a half million, then decide where to go from there. Within a couple of months I put in another quarter million. I now have $750K in (which has grown to $812K). I think I am at the right level now.

Most lenders lend smaller amounts over many loans. Propser even recommends this on their website. You have gone against the convention and frequently lend large amounts (you have even lent $24,950 on a single loan). Why?

So many lenders think that if diversification is good, more diversification is better. But diversification has a cost. More money can be made by selecting a small number of great loans, instead of a mix of good and great loans. Diversification should be measured broadly, considering all assets. It is not necessary to diversify each asset class, such as Prosper.

Part of the appeal of Prosper to some lenders is the personal aspect of it. How personal are you with borrowers?

Not very. I enjoy getting a “thank you” when I fund 90% or 100% of a loan. I sometimes respond with a few pleasantries and share a bit of information about things that we have in common. I sometimes use the opportunity to show borrowers that they are dealing with a real person, not an impersonal institution…hoping that they will consider the effects of not paying me back.

Prosper has the option of creating standing orders. The computer will bid on your behalf if a loan listing meets certain conditions (interest rate, credit grade, # of delinquencies, etc.). What are your thoughts on standing orders?

I don’t like them. I want to take a minute to see if the borrower has a reasonable story. If I were making $50 bids, I would not have enough time to read listings, but I typically bid several thousand. I have, at times, spent as little as 15 seconds reading a listing before bidding, but I always spend at least a little time reading their story.

Your current estimated risk adjusted ROI at Eric’s Credit Community is 18.7%. Now that you have been around Prosper for a while, do you feel that number may be accurate? What ROI would make you pleased with your Prosper experience?

Originally, I expected returns of 18% to 20%. I now think my returns will be more like 15%. I am happy with 15%. If my returns drop to 11% or 12%, I’ll start moving money back into stocks and mutual funds.

Is there anything else that you would like to share about your Prosper experience?

Some days I feel badly that most people with low credit scores cannot get funded on Prosper, but on other days it seems like most people are where they are through their own choices.

Lastly, wondering minds are probably curious about this one. Do you get any special “perks” from Prosper for being the leading investor? If so, can you share with us what they are?

I have not received any discounts or other perks that translate to money in my pocket. I was taken out to lunch by the CEO, Chris Larsen, and the VP for development, Karen Appleton; and I did get a nice tour of the Prosper headquarters in San Francisco. They have a nice place on the top (33rd) floor where NBC Broadcasting used to be.

Thank you pensioner for the interview

To read more about Prosper, including more interviews with lenders as well as my own borrowing experience, please visit my Prosper.com archived articles.

NOTE: I also asked pensioner one other question unrelated to Prosper, and I will be writing about that later this week

Without further ado, here’s the interview…

What was it about Prosper that made it appealing to you as a Lender?

I’m probably one of the few bold people that have made Prosper a key portion of their investment portfolio. In the past, my fixed income assets (cash, CDs, bonds) have been lacking. The popular rule of thumb is stocks in your investment portfolio should make up 120%-your age; and fixed income investments would be the remainder. In my case, that comes out to 82% stocks, 18% fixed income. Currently, about 8% of my investment portfolio is invested in Prosper loans, and in the future I expect to allocate around 12% or more. Why would I put such a large stake in such a potentially risky investment? There are a number of reasons.

1. The main reason is it’s fun and rewarding. I like reading peoples’ different loan requests and like feeling like I am making a difference, helping someone out. For the first time, fixed income investments are fun and interesting. Also, as an open marketplace, I feel that the rates set are usually good for both the lender AND the borrower.

2. Second, the potential rates of return on Prosper are fantastic. Typically the stock market returns average between 10-11% a year over long periods of time. With Prosper loans, you can get returns just as high or higher, which is absolutely amazing compared to CDs, bonds, or money market accounts. My current Prosper portfolio is estimated to have a 13.80% interest rate (assuming no defaults and no early paybacks). Depending on your tolerance for risk, you can have lower or higher rates of return. You can manage the risk by choosing borrowers with good credit ratings and by spreading your money over a large number of borrowers. For instance, my loans are spread across the following credit grades: AA=26%, A=45%, B=16%, C=13%

3. Finally, I feel very comfortable lending on Prosper. It is a very well-designed system. For instance, loan payments are reported back to credit reporting agencies so borrowers have an incentive to pay on time or risk ruining their credit ratings. Also, the system does a great job of tracking loans and payments and key statistics.

How “personal” are you with Borrowers? Do you contact them to ask additional questions?

I like the human aspect of Prosper. I personally contact about 75% of the borrowers that I lend to. I like to follow up on the details of their listing because usually something they write might spark a question, or they might leave out details that I’m interested in seeing. I tend to make fairly large loans so I like to personally hear from the borrower. After about 6 months of using Prosper.com, so far I have had 0 defaults and 0 late payments on 11 loans, which, though a fairly short history so far, is quite encouraging.

Do you feel that a Borrower needs to join a group within Prosper?

I think that if a borrower has a good credit rating (AA, A, B, and possibly C if the record is clean) and does a good job of writing up their loan description, there is no need to join a group. The group system in Prosper really has little benefit for those people and can even hurt them if they join a bad group. For people with worse than C grade credit, it might be good for them to join a reputable, group with a good track record. Joining a bad group, however can really hurt you in many ways such as getting a worse interest rate or getting fewer bids. The worst groups I see are ones that charge a huge fee (Prosper calls them “rewards” to the group leader), which can be as much as 4% of your loan amount, depending on your credit rating. This is absolutely outrageous. Look for groups that have a good track record of getting loans funded, of groups where the members and leaders bid on the loans, and where the group leader goes through extra verification work, if you even decide to join a group.

What one piece of advice would you give someone that is thinking of borrowing money with Prosper?

Only join groups that do 100% reward sharing (no group leader rewards). Do your homework on groups to join. Write up a good loan which tells your story, lays out your financial situation in detail in terms of your income and expenses, explains why you need the money, and your plans and ability to pay the loan back. Make sure to ask for a fair to slightly higher interest rate for your credit rating to start out with (you will likely get a lot more bids, which many times creates a competitive situation that drives down your rates in the end). Getting a loan from Prosper can be easy, painless, rewarding, and maybe even a little bit fun!

Thanks Spotsearch for the interview

I decided to let Prosper do its thing and take the money out automatically on the due date, which is today. I logged into my account and I see that there is a payment processing and my next payment is due 1/20/07. I do not see the withdrawal at my bank yet, but I’m sure it will show up shortly.

Now with that paid, it’s time to do a debt update…

“Thank you so much for this site. I have a total credit card debt of just over $29,000, thanks to grad school and my own bad choices. I really want to get this paid off quickly, and in researching my options, came across an article on prosper.com in Consumer Report. I also found your blog in searching for reviews on person to person lending. Can you tell me more about your experience? In particular, do you feel this is a trustworthy site?”

I’ve realized after reading this comment that I haven’t really talked about my Prosper experience much lately. I guess the main reason for that is because now that I have my loan – it’s just a matter of paying it every month. There are no worries about transferring balances or a raising interest rate. There is much to be said with consolidating credit card debt into a more traditional loan.

To answer the reader’s question about Prosper, I do feel it is a trustworthy site. I have had my loan for a while now with no problems. So, I feel the company is a good one. Now, with almost everything, there will be some people that can ruin the experience for others. Scammers can be found within the users at the site and they are usually borrowers. I haven’t kept up with recent happenings, but last I knew the Prosper team was working hard to weed out borrowers that are scammers.

Since some people looking to Prosper for a loan may despirately need money quickly, that also provides an ideal situation for lenders that are scammers. They may attempt to contact borrowers to make a deal outside of the website. They may also try to get personal information from you saying they will make a bid if you give that info. Now, I haven’t heard of this happening, but the potential is there.

When it comes to Prosper, there are many blogging about it as well as writing about it, so read as much as you can. Prosper does seem to provide chances for those who may be unable to get loans through a bank. The lenders do look at the numbers, but you have a chance to give them your story as well. Often, banks just don’t give you that chance; however, sometimes they do like they did to a reader here.

With anything you do, just be cautious of giving out your personal info and make sure you read about something before jumping in. Prosper may work for some, but not others. Do what feels right for you.

As it was noted, I used prosper.com to obtain a loan that was at a lower fixed interest rate. You can find out more about my borrowing experience with Prosper in my Propser Category.

Another article that may be of interest can be found at MyMoneyForest.com. He conducted a great interview with Prosper.com.

Thank you for stopping by

How to Write a Good Prosper Loan Request

If you are thinking of trying Prosper for a loan, I highly suggest reading any suggestions on how to write a good loan request written by Lenders. It can increase your chances of your loan request being funded.

I had the wonderful opportunity of interviewing Spicee. She was a High Risk (HR) Borrower who had a successful loan listing. She is also the group leader of TruCheck Lending Solutions. She has a lot of great advice about her experience to share with everyone:

What made you decide to try Prosper for a loan?

I am a single mother of two daughters. In 2003, the year my oldest daughter started college, I had to unexpectedly retire on disability due to illness. Even after retiring and having to manage on a fixed income, I was still somehow able to manage my household as well as the balance of her tuition that financial aid did not cover.

This year was going to be a challenge since I now had another daughter starting college in the fall. I needed to pay her matriculation fees and housing deposit during the summer in order to hold her spot in the upcoming fall semester. I also needed to plan for book and supplies as well.

One evening while watching the news, Clark Howard did a consumer report on this new concept called “people-to-people” lending through a website called Prosper.com. I decided to go onto the website to read more information on the concept.

Initially, my first thought was, “this sounds too good.” After reading through the site a couple of times, I decided to register. Since I was no longer employed, I had not tried obtaining any credit because I felt no one would extend credit to someone on a fixed income.

Also, I thought that I could “kill two birds with one stone” so to speak by borrowing the funds on Prosper to cover the money required upfront for school and purchasing laptops, books, and other supplies my girls needed this fall. By doing this, I would only have one bill instead of several different bills per month where school was concerned.

How “personal” were Lenders with you? Did they contact you to ask additional questions or to provide advice?

When I registered, Prosper had only been advertised to the public for a month or so. I think everyone; lenders and borrowers were basically feeling their way through the process. While reading through the site, I discovered the discussion forums. I registered and began interacting with the people there. I advertised my listing and fielded questions from potential lenders as to why I needed the loan and how it would be repaid. I listed a breakdown of my budget in my loan listing and was upfront in all of my responses to the lenders participating in the forums.

I had one lender in particular who had already placed a bid on my loan email me stating that if I could provide proof of my income, he would feel comfortable with bidding additional funds. Before I could completely gather all the info he requested, he wrote back telling me not to bother as he felt comfortable with me through my participation in the forums that I would be a good candidate for funding and placed quite a bit on my loan. All of the lenders were extremely helpful with offering advice.

Overall, do you feel that Prosper is a good avenue for those seeking loans, especially those with low credit scores?

I believe that Prosper is a great place for individuals with any type of credit to obtain a loan. People need money for a variety of reasons however, if someone has low to no credit, it is extremely difficult to obtain credit. Prosper has created an avenue for sub-prime borrowers to get out of financial binds and began the road to gaining or improving credit.

Why do you feel that your loan request was successful?

I think that my loan was successful because I was persistent and believed in what I was trying to accomplish. I actively participated in the forums advertising my listing while learning as much as I could about credit and borrowing. I was honest, open and upfront about my situation

What advice would you give someone that is thinking of borrowing money with Prosper?

First of all, Prosper is not a charity. It is a site where people lend out their hard earned money to individuals basically with low to no credit on the basis that it will be paid back.

If someone is looking to obtain funding on Prosper, I would suggest that they:

1. Read through the information on the forums. There is a wealth of information there.
2. Join the forums and actively participate in the discussions. Get to know the lenders there and building a rapport with them.
3. Be honest and open about their situation.
4. If they decide to post a listing requesting a loan, be able to provide detailed answers concerning their credit data.

Finally, how satisfied are you with your Prosper Experience?

I am extremely satisfied with my Prosper experience. So much so that I have started my own group on the site to aid individuals in getting funded. I truly believe in the concept of people-to-people lending and want to see Prosper thrive.

Also, since I am no longer employed, I can devote an enormous amount of time to developing my group thus helping prosper to grow; not to mention the forums are addictive!

Thanks Spicee for the Interview

I haven’t discussed this yet, but near the beginning of the month I received my monthly statement from Prosper. It had three main parts:

1.) Loan Summary – all the details about your loan such as the interest rate and current balance.

2.) Payment Summary – shows all of your payments and includes notes about them in case any action is needed.

3.) Account Activity – shows your payments and how it affects your balance.

Overall, a very nice statement that is easy to follow. It’s also nifty to have to print out and keep for your records

Without further ado, here’s my interview with Michael:

What about Prosper made it appealing to you as a Lender?

Being an internet dork, and a money dork besides that, I was fascinated with the Prosper idea from Moment One. “That is way too cool,” was probably my first thought. And a few seconds after that I was registered.

I had no need to borrow, thank goodness, especially at the rates effective on Prosper at the time. But the idea of lending on a peer-to-peer basis fascinated me. I was so intrigued with the idea of being a Prosper lender that once I’d done a bit of research, I honestly
couldn’t wait to get my experimental (paltry!) $300 transferred into Prosper so I could start bidding on loans.

I didn’t get in it to “double my money” with Prosper loans, or make a killing, or anything like that. More than anything I was fascinated with the idea of micro-lending as facilitated by the internet. I wanted to see how it would play out. And I wanted to have a front-row seat. (Those seats are expensive … for a reason.)

Do you feel that Prosper is a good avenue for those seeking loans?

At some level, if a borrower’s credit is less-than-perfect, then yes, I think Prosper should be given strong consideration. I’d go so far as to say that in its current form, Prosper constitutes a much better setup for borrowers than it does for lenders.

Lenders can see much more relevant info about borrowers now than we could when I originated the majority of my loans. But even with that, the risk/reward scale still comes down heavily on the side of borrowers, in my opinion.

How “personal” are you with Borrowers? Do you contact them to ask additional questions?

Of my six open loans, I have only personally contacted one borrower either before or after the loan was originated. And I’m okay with that. I’m not interested in making Prosper a significant part of my investment portfolio, at least not right now, and certainly not in Prosper’s current form. If I were, I probably would be contacting all prospective borrowers. I would certainly be throwing a LOT more money into the Prosper ring in order to make the ROI more predictable.

Do you feel that a Borrower needs to join a group within Prosper?

Nope, not at all. I leave a borrower’s group affiliation out of my decision almost entirely. With 99 percent of the groups out there, when push comes to shove, group affiliation isn’t going to do a whole lot to get me, as a lender, my money.

Many lenders refer to a lack of “good listings” (loan requests from Borrowers). In your mind, what makes a “good listing”?

That’s tough to put into words, really. As a lender, I want to see listings that make sense for all parties involved. I want to see the benefits for myself, obviously, in the form of “safety” (if there is such a thing in the world of Prosper lending) and in an ROI that’s fair
for the risk involved. I want the loan to benefit the borrower in some way. I don’t want the loan to simply dig them a hole deeper than the one they’re (likely) already in.

I want the borrower to be willing to divulge enough financial details that lenders can have a reasonable picture of the risk they’re taking on. I want a borrower’s story to be consistent with the answers they give to lenders and group leaders who make personal contact.

Here’s the gist of it, and what lenders ultimately have to try to decide on a loan-by-loan basis: That person you’re loaning money to — are they on the way up, or on the way down?

Money is a two-way street. If you’re a Prosper micro-lender, you sure want to stay away from the downhill side of the road.

What one piece of advice would you give someone that is thinking of borrowing money with Prosper?

I’d suggest that they do some serious math, run the numbers, and see whether or not a Prosper loan really makes things any better for them. Taking on additional debt is ALWAYS something that needs to be examined from all angles. Too many times it’s an emotional thing: The facts and the potential stress and the hard dollars on the line get brushed aside by short-term “wants” and “shoulds” and “maybes.”

In the case of replacing one form of debt (say, high-interest credit-card debt, which is open-ended in term) with another (say, a fixed-term Prosper loan which MIGHT come at a marginally-better rate) isn’t always a good idea, either. Again, you as a borrower have to
crunch the numbers. Are you making tomorrow better for your family … or worse?

In the world of money, when you get right down to it — when you really wrap your brain around all the costs and the “benefits” — the instances are pretty minimal where a loan truly carries a borrower to a better place than the one he was in before. This is especially true in comparison to the total number of loans being made.

Finally, how satisfied are you with your Prosper Experience?

So far I’ve originated eight Prosper loans. Two loans paid off early, and I reloaned those funds. Considering that two of my current six loans are right now in late status, I’d be outright lying if I said that this has worked out as I’d like. However, as the cliché goes, “Tuition to the School of Hard Knocks ain’t free.” And that is exactly why I have placed so little money on the Prosper line. (I didn’t like visiting the Bursar’s Office in college, either. Money always seemed to vanish when I set foot in there.)

Anyway, when I bid on these loans, I knew what I was getting into. The borrower info I had at my disposal was extremely narrow. I limited myself to loans where the borrowers involved had no worse than ‘B’ credit ratings. Yet I absolutely knew that credit scores tell you little about where a person is, right now, in life. And they tell you zero about what storms may be approaching borrowers’ doors and what thoughts are rifling through their heads. Any lender who thinks otherwise is pretty naïve.

From the lending side, Prosper had made marked improvements lately, and I’m glad to see it. As a study in human behavior, financial psychology, and the market forces of supply-and-demand, there’s nothing else quite like Prosper out there (yet). I read the Prosper message boards frequently, and scan through loan listings as I have time. I still shake my head in disbelief at some of the loans that are getting funded.

In a way, it’s nice not having any money in Prosper available to loan. It means I can just sit back and watch my non-late loans accumulate interest … and watch everything else that goes on at Prosper just for the entertainment and/or educational value of it.

Will I be loaning more money on Prosper in the future? Don’t know. Only time will tell. For now, Prosper is just a sideshow in my personal financial circus.

Thanks Michael for the interview

UPDATE: So far, my payments have been taken out as they should (no double-dipping).

The process of making a payment is really easy. After logging into my account, I clicked the “Make a payment now” link. I was taken to another screen where I have the following choices:

1.) “Make next monthly payment of $112.77 now – Your next payment is due on Jul-20-2006″

2.) “Make an additional payment of $ (fill in amount here) – Your next monthly payment will proceed as scheduled for Jul-20-2006″

3.) “Pay off entire loan balance now”

Of course, being able to do #3 would be awesome but I’m not there yet So, I went with #1 and I am just paying my first payment a little early. After I indicate that I would like to do #1, I am taken to a page where I confirm the information and click submit. After that, the next screen states the payment was successful and I was given a transaction number. I’d highly recommend that every borrower keep track of the transaction number for each payment. I just include it in my memo line in Quicken.

Next, I head on over to my account overview and I see that I now have $0.00 due July 20, 2006. So far, so good.

Now, where’s the interest info? If you click on the “View loan details” link, you will be taken to a page that shows the status of your payments and it also breaks down how much of your payment went towards interest and how much went towards the principal. My payment split ended up being $18.99 interest and $93.78 principal.

I sure hope my loan payment goes off without a hitch and my payment is made early and no duplicate payment occurs. If not, I have a buffer in place and if the payment doesn’t go through I will have a few days to try to work it out before lenders start worrying about a late borrower. Luckily, I have the ability to contact most of my lenders to let them know if there is a problem – and for those who check in on me here, you’ll find out here as well

Who’s Bidding on Prosper. Updated daily, you can see all of the Lenders and what they are currently bidding on.

Credit Boards Forum about Prosper.

And here are some bloggers that I know are writing about their experiences as a Lender (L) and/or Borrower (B). If your blog is not included, please leave a comment and I’ll add you

Rate Ladder (L)
Dual Income No Kids (L)
It’s Your Money: Money Musings (L)
Makingourway (L)
My Personal Finance Blog (L)
Plugged in Finance (L)
Prosperl.icio.us (L)
Seattle Editor’s Prosper Blog (L) & (B)
Shaun’s Real Estate Adventures (L)
Spotsearch (L)
Tired but Happy (L)

For more info, make sure you read my Prosper category.

But with the onset of people to people lending via Prosper, I think it is a great way for people to take control of their debt on their own terms. With my Prosper experience, I had $3,500 sitting on a credit card at 13.99%. Thanks to Prosper, that interest rate has been reduced to 9.9%. PLUS, I am fixed into paying it in three years or less.

If my situation was different and I had multiple credit cards that I wanted to consolidate, I would have used Prosper for that purpose. The personal aspect of Prosper can possibly help you find people willing to take a chance of giving you a loan, especially if you have less than perfect credit or your debt to income ratio is high.

If you decide to use Prosper strictly for debt consolidation, here are some things to keep in mind:

1.) States have set maximum interest rates for loans, and some states have a maximum rate under 10%. If you have low credit, that can hamper the ability for your loan request to be funded.

2.) When you do create a listing, your debt to income ratio will include your current debt AND the new debt incurred with the Prosper loan. Make sure you include in your listing that the loan will be used to pay off current debt so your debt to income ratio will not actually be that high. To help ease the minds of lenders, I’d suggest adding up all of your current monthly debt payments of the balances you will be consolidating. Then, note your new monthly payment with the Prosper loan. If the Prosper loan payment is higher (which it probably will be due to having to pay it in three years) note how you can afford the extra money needed for your monthly payments.

3.) Start your loan listing with the highest rate you would feel comfortable with paying. For me, I started my listing almost 2% less than my credit card interest rate. If my loan ended with that interest rate, it may not have been a drastic reduction, but there’s a sense of pride with paying off the credit card and paying interest to regular people.

4.) Do not state in your listing that you want the loan to get rid of debt. I have seen some Borrowers state this, but with getting a loan from Prosper you are not getting rid of debt. Your Prosper loan is as valid of a debt as your credit cards or other loans. You are merely shifting your debt around to make your situation better. Showing Lenders that you have a handle on your finances and have the correct attitude with paying it off can help get bids.

5.) Do not opt to have automatic funding. If you choose automatic funding, the rate that you have listed will be the rate you will receive. There is no chance for Lenders to bid your rate down because your listing ends when you are funded 100%. In my case, there was a flurry of activity near the end due to last minute bids. Let the market (and human nature) bid your rate down. For debt consolidation and debt reduction, every little bit helps!

6.) Check out my list of Tips for Listing a Loan on Prosper for some general tips.

Good luck!! If you have questions, feel free to leave a comment and ask

1.) Post Pictures. Now, you don’t have to post a picture of yourself if you don’t want to, but I have heard that Lenders like to see who they are lending to. For me, I didn’t want to do that. Instead, just post something that let’s the borrower know a little bit more about you and why you are asking for funds.

2.) Be Specific. When you list your loan, be as specific as possible as to why you are wanting a loan and also explain how you are able to pay it back and on time. A great thing to do is include your monthly budget. If you do not have a monthly budget already established, please do so before listing. Make sure that you can afford to pay back Lenders. The more success stories from Prosper, the more likely it will flourish.

3.) Explain Bad Credit. If you have bad credit, take a few minutes to add a brief explanation in your listing. For example, if you are showing delinquencies, the Lenders will be able to see that information. You will not be able to see what the Lenders see until after your listing is posted. But, before you list you can see your credit report for free by going to annualcreditreport.com. Go through your credit report and explain the negatives that are showing. Explain why you have problems on your credit report and explain what you are doing to resolve them.

4.) Include a Profile Description. Every user on Prosper has the ability to enter a profile description. Use this area to let lenders know more about yourself or to add additional information to your listing. Within your listing, make sure you note that more information is included in your description.

5.) Don’t Ask for More than You Need. It may be tempting, but limit your loan listing for asking for just what you need. The lower your loan request, the less of a risk you are perceived to be. You also have a lower monthly payment which Lenders will view as more manageable.

6.) Proofread Your Listing. Asking for a loan on Prosper is serious business. You want to present yourself in the best light possible, so that means creating a listing with correct grammar, punctuation and spelling. If possible, have someone else review your listing for errors (create it in a word processing program first).

7.) Read…Read…Read. One of the best ways to learn about the borrowing process is to look at others’ experiences. Great places to start are the Prosper Message Boards and the Credit Boards Prosper Section

8.) Advertise your listing, but not Blatantly. Nothing is as annoying to Lenders than a Borrower “bugging” them for bids. A way to advertise, but not bug is to participate on the message boards listed in #7 with constructive things to add to a conversation.

9.) Answer all Questions Quickly and Thoroughly. Use your judgment to protect yourself from fraud (don’t give out social security or driver’s license number for example) but try to answer all questions from Lenders. They are wanting to make sure you will stay true to your word and pay back your loan.

And, what I believe is probably the best advice I can give anyone…

10.) Be Yourself. Tell in your listing why you need the loan. Let Lenders know a little bit more about who you are and how you think. If you pay everything two weeks in advance, tell them that. If you pay things on time, but right near the due date, tell them that. If you have had problems in the past with spending money or paying things on time, bring it out in the open and explain what you are doing to resolve your past “problems.” Don’t try to fib a little with the information you give. Just be honest and be yourself. We are all human, and we all have made mistakes in the past. Don’t be ashamed of them, as long as you have learned from them.

“A man should never be ashamed to own he has been in the wrong, which is but saying…that he is wiser today than he was yesterday.”

- Alexander Pope

What was the first thing I did? I set up a payment for tomorrow to pay Credit Card #2

It won’t be paid off in full yet. My balance transfer from Credit Card #4 hasn’t shown up. I am starting to get concerned, but it still hasn’t been two weeks yet. I have to be patient. After that balance is completed and the Prosper payment posts, there will still be a balance on the card that I will pay from available cash. Then it will be at zero for a little bit until the next statement. Unfortunately, there will be some lingering finance charges to pay.

But after that – Credit Card #4 will be zero for the first time in a VERY long time.

What should I do with the card now?

I definitely shouldn’t close it. That’s $23,500 of credit right there and closing the card will probably negatively impact my credit score. I’ve briefly thought about the fact that I could buy a car outright with my card. But that’d be a silly thing to do considering the rates and considering that we don’t need another car. And quite frankly, I’ve put a lot of work into getting this debt down and I want to keep it that way.

I think the best thing to do would be to lock it away and basically forget about it. I’ve already prepared myself and signed up for emails alerts. I get a weekly update on my balance just to make sure the balance is zero and I guess it is something I can receive weekly and smile about

Things are coming together quite nicely. Now, I just have to explain my debt-payoff game plan (coming soon).

It’s getting late and I have a few things to attend to yet tonight. Thank you everyone – I am definitely smiling right now

I hope to write more this weekend about the whole experience and I have a few more resources to list that others may be interested in. Plus, I have some calculating to do now that I will shortly know my final interest rate on my Prosper loan. Thank you to everyone who provides sites to find the calculator that I was needing.

As for right now, it’s time to turn the computer off and to go have some fun at a parade with my son. Mommy’s been on the computer a lot this week

My phone call was just asking about my phone number, but what if the caller started asking for more information trying to scam me? So borrowers, don’t give out any information such as your social security number, driver’s license number or bank account number without making sure it is Prosper.

Prosper understands the concern, because I actually sent an email to customer service asking if someone from there called me. In their reply that I received this morning, they even stated, “I understand your concern.”

Don’t be afraid to say, “May I call you right back at the number on the website?” and just explain that you are cautious. When dealing with so much personal information, they should understand which they clearly did with me.

Sorry if I sound preachy, but please just be careful.

A woman from Prosper called me today to verify my telephone number and to verify that I posted a listing on Prosper. She basically told me that they will not be asking for my paystubs and my loan will be funded to my bank account on Tuesday.

I took the opportunity to ask her about the income at Prosper since one of the things I was battling with was the fact that I listed household income. I was concerned that lenders that already bid on my loan may be upset once they found out what I calculate my total household debt to income ratio to be. This month it’s 45% but Prosper doesn’t include mortgage debt so that reduces our ratio to 34%. Even though I give out a lot of information about myself on my blog, I don’t want to feel like I tricked people into bidding on my loan by doing something wrong (hense the reason why I thought of relisting).

What she said is that Prosper is set up to do individual income but they accept household income. A borrower must then provide paystubs for themselves as well as their spouse if their information is chosen to be verified. I mentioned that the debt to income ratio would then be incorrect and she agreed with me. I think this is an area that Prosper needs to fine-tune.

After that call and receiving a few emails, I have smile on my face again. It disappeared for a little bit, but it’s back.

A few Lenders said a few things about me that I don’t believe are true on a message board. I don’t have the thickest skin and I hurt easily. I care too much about what people think about me sometimes. I’m the type of person who tries to make everyone happy, even though I know that’s not possible 100% of the time.

What happened hurt my spirit a little, hense my post earlier. I was thinking about withdrawing the loan and relisting. But an email I received from a bidder on my loan made me feel a lot better about things. Then, while writing this post I received another very supportive email from another bidder. Words can hurt…words can heal…words are powerful. I think blogging and my Prosper experience has made me really realize that. A telephone call with Prosper (I’ll write about it hopefully later tonight if I have time) made me feel better as well.

My loan closes tomorrow night, and as of right now the interest rate is 11% (the bidding started at 12%). Part of me wants to start plugging all the numbers, but that actually will be hard because of how I am paying my debt off. Anyone know of a debt reduction calculator that lets you choose what order you want to pay off your debts? The ones I found automatically calculate by paying the highest interest rate balances first – which I won’t be doing for a little bit (more on why later). If I can’t find one, I guess I’ll put my Excel skills to work and share my creation here

I am so thankful for every bidder on my loan and for all of my fellow personal finance bidders showing their support with their bid and/or blogging about my experience. All of the support I receive from everyone really does mean the world to me.

After work I will write more about it.

Here’s something I’ve been thinking about today…

I did not join a group on Prosper mainly to keep my anonymity because of my blog. If you join a group at Prosper, the Group Leader is supposed to perform “vetting” on you to get to know you better. They can ask for paystubs, proof of home ownership, etc. The degree of vetting involved depends on the group you join and your group leader. I think that’s a great idea to have something like this to help prevent fraud within the Prosper community.

Since I am not in a group, I figured I would receive at least a few emails from Lenders asking a few more questions. But it appears that my blog is answering most of the questions that Lenders may have? Or is it that my credit score is an “A”?

Looking further into it, the highest amount someone has bid so far is $175.00. I have seen some Lenders bid over $2,000 on a single loan. Is that because there is doubt as to who I am and what I claim to be doing? Or is it because I am asking for only 12%?

So many questions. For an analytical person like me – this is fascinating

Index of My Borrowing Experience with Prosper

1.) Prosper Discussion Boards (found on the Prosper.com site as a sub-heading under “Help”). Even though there are separate forums for Borrowers and Lenders, make sure you look through both. Not only will you find great tips on how to do your listing, you will learn the general feeling of those lending at Prosper.

2.) Prosperl.icio.us. This is a blog written by a Prosper Lender mostly about lending, but he gives some great information for Borrowers (found by scrolling down on the right sidebar). It also doesn’t hurt to read some of the other posts as well even though they are geared towards Lenders.

3.) Eric’s Credit Community list of delinquent loans. Why look at that? While most delinquent loans are from High Risk Borrowers, there are still some late payments made from those with good credit. It just shows that anyone can be delinquent and you need to present your case to show you can and will repay the loan.

Even though my listing is already up, I’m still learning more and more. If my loan doesn’t happen to fund, I’ve learned things from these sites that I can do better in regards to my listing if I choose to try it again.

Not verifying the income could be one way that the debt-to-income ratio is off if a borrower chooses to exaggerate their income (which, by the way, if discovered will terminate your membership at Prosper and will not be tolerated). Prosper can at any time before your loan is funded request more information about you and it appears that they are doing that to select funded loans.

There’s another way it could be off and I’m proof….it doesn’t take into consideration total household debt!!

My jaw about hit the floor when I saw that Prosper gave me a 24% debt-to-income ratio. I’ve made it public on my blog that it is more around 50% (includes total household income and household debt). That’s about twice the ratio that Prosper gave me.

One difference is that Prosper does not include mortgage payments. That lowers my monthly debt by approximately $340 so that helps to lower my ratio.

The biggest factor is that my husband’s debt is not included. The credit report pulled on borrowers only gives the borrower’s debt. While it is true that my husband’s debt is his and mine is mine (technically), I consider all of it our debt and include it in my ratio.

While I like the 24% ratio that Prosper gave me, it doesn’t give a good representation of our debt load. This may be something for Lenders to keep in mind when they see an attractive debt-to-income ratio. If I wasn’t blogging about my finances, you wouldn’t have any idea that our debt load is that high.

It’s Your Money: Money Musings

My Personal Finance Blog

Thank you…thank you…thank you!

“…I am a woman on a mission. I am dead set against getting rid of my family’s credit card debt.”

I didn’t mean that I am against getting rid of debt, but somehow I worded it that way. I can just shake my head and laugh it off because once your loan is listed at Prosper – you do not have the ability to revise your listing. I can withdraw the loan and fix it, but people have already bid on it and as of right now it is 22% funded. It’s doing well, and I think everyone understands what I was trying to say…I hope. Believe me, getting the credit card debt paid off is one of my top priorities.

What does everyone think? Should I withdraw it and relist or just live with the boo-boo?

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I still have $3,500 left on Credit Card #2 that I cannot do a balance transfer with. I have been debating trying Prosper for a loan, and I decided to just go for it.

I couldn’t justify going through Prosper unless my rate is below my current 13.99% finance charge. So, I started it at 12%. I am hoping that I can still attract Lenders’ eyes.

If you’d like to participate, feel free to check out my listing:

And feel free to look around my blog. You see the good and bad, and I hope everyone sees how determined I am to finally pay off all of my family’s credit card debt.

The problem is the remaining $11,000 balance on Credit Card #2. That will remain at 13.99% until the entire card is paid off. I am really considering trying Prosper to get a loan. I was thinking I would use the loan to play in the balance transfer game, but now I am just thinking of keeping it there and paying that loan off first (it probably will be the highest interest rate of all debt but less than 13.99%). Part of me is wondering if somehow I could get the loan funded around 7 or 8%.

I’ve been researching more things about Prosper and found answers to a few of my big questions that I’ll share here:

1.) Will applying to be a borrower affect my credit score? Having inquiries on your credit score can lower it by a few points. With my score recently increasing, I would not like it to lower. But I have discovered that the credit report that Prosper pulls on you (to obtain your public credit rating) does not affect your score! It is initiated by you – so it does no damage to your FICO score.

2.) How much does it cost? The answer here is pretty simple. The cost of the loan is just 1% of the balance funded. With requesting $11,000 my fee would be $110. That $110 would be taken from the $11,000 funded so I actually would be getting $10,890 in my account.

3.) Is there a prepayment penalty? If you pay off your loan before the standard three-year term, you will not be penalized. That is a major plus and that point should always be looked into for any loan obtained.

I did end up registering and I was approved right away to list a loan. I’m still looking into finding a group to join, and still reading lots of literature. And, of course, I still I have to make sure that I want to do this. Part of me is wondering if this is the break that I am looking for so I can get rid of the high interest balance on Credit Card #2.

As usual, what it will boil down to is learning as much as I can and then listening to my gut.

I’ll keep everyone updated

All and all, I think the site was started with a great thing in mind.

I’ve been curious about it because I have been trying to get the balance off of Credit Card #2 so I can transfer it back on for a lower rate (the rate is currently 16.49%). I tried going to a bank once for a loan, and that didn’t work. Could something like Prosper work for me?

As of this moment, there are not many people with funded loan requests. And those with funded requests appear to have the lower debt to income ratios (less than 20%). My ratio is 52% and I think that would be too high for lenders to even take a second glance at me. I can’t blame them – I know if I had money to lend, I would fund loans of people that I felt would pay back. The harsh reality is that a higher ratio means you are more likely to default.

It will be interesting to see if the site will gain more attention and possibly more loans will be funded for those with a ratio similar to mine. I think for now I will pass on the possiblitiy of using Prosper, but I will keep a watchful eye on the site’s progress. Who knows – maybe in a few years I can be on the Lender’s side of the site

For more reading, there is an article in the Wall Street Journal written by someone who is lending money to others via Prosper.