Lending Club vs Prosper for Borrowers: Four Big Differences

A common struggle borrowers face when applying for a peer to peer loan is choosing between the two major companies: Lending Club and Prosper. From the outside, both look very similar. Both offer great low interest rates on loans up to $35,000. However, there are some key differences between the two that borrowers should be aware of.

To begin, check your rate with both and see which offers you the lowest rate:

Check your rate at both, go with the lower rate

Won’t affect your credit score.

Note: for a detailed look at getting a loan on each platform, you can read my Lending Club Loan Review or my Prosper Loan Review. I got a loan with both Lending Club and Prosper and have explained the process in great detail.

4 Ways Lending Club & Prosper Are the Same for Borrowers

#1. Personal Loans up to $35,000

cashhhBoth Lending Club and Prosper offer the same basic service: the ability to apply for a loan between $2,000 and $35,000. Both the platforms ask you some basic questions about your age, employment, and income. Both check your credit score to see how well you have paid your bills. Finally, if approved, both open your application up for investment from lenders. When funded (and most loans do get funded), the money is transferred to your bank account. You then pay it back with interest over the next three years (or five years).

#2. Better Applications Can Get Bigger Loans at Lower Rates

Both Lending Club and Prosper have ways to improve your result when applying for a loan. Here are three ways to get a lower rate or access to a bigger loan:

  • Have a good credit score. Borrowers with a good credit score get lower interest rates and can apply for bigger loans. Similarly, many negative marks on your history can get your application declined, or only approved for a smaller loan than you might need. Keep updated on your credit report (free credit check here), making sure your history is free from errors.
  • Don’t shop around for a loan. Every time you apply for a loan, you get an inquiry, a somewhat negative mark on your credit. The greater the number of these marks, the higher your interest rate will be. This is because people with many recent inquiries have often been denied for loans elsewhere, and are more likely to skip out on repayment.
  • Don’t ask for too much money. The bigger the loan you take out, the more interest you pay on it. Also, if you ask for a 5-year loan (versus a 3-year), you will pay extra for that as well. Only apply for as much as you need, and try to pay it off in three years. This way you will be offered the lowest rate possible.

lending club and prosper application pages

#3. Borrowers Usually Pay a 5% Closing Fee

Both Lending Club and Prosper charge borrowers a fee to take out a loan (Lending Club calls this an origination fee; Prosper calls it a closing fee). This fee is different for different borrowers, but for most loans the fee is 5% of the loan amount. 80% of peer to peer loans pay this 5 percent closing fee, though the best 20% of borrowers pay a smaller fee: between 1-4% of the loan amount.

You should consider this fee when you apply for a loan, since 5% of your loan will be lost to to it. For example, say you needed $10,000 to pay off credit card debt. You should actually ask for $10,526 since $526 (5% of $10,526) could be taken from your loan by Lending Club or Prosper. The remainder ($10,000) would then be deposited in your bank account.

#4. Loans Are Funded by Real People

peopleOne of the amazing things about peer to peer loans is that they are not funded by banks. Instead, people all over the United States are funding these loans. In this way, Lending Club and Prosper are the same, helping organize this funding as it moves from their bank accounts to yours. When you pay your loan back over time, your payments then return to these lenders in whatever state they live.

4 Ways Lending Club & Prosper Are Different for Borrowers

#1. Prosper May Have Lower Interest Rates

This may change in the future, but for now it seems true. If you apply for a loan on both platforms, Prosper may offer you a lower interest rate than Lending Club. To demonstrate, I checked my own rate on both platforms today.

For a $4,950 loan, Lending Club offered me a rate of 9.71%:

Lending Club Borrower Application

For the same loan, Prosper offered me a rate of 8.69%:

Prosper Loan Approval Sept 2013

This difference of 1.02% is important to note: for the Lending Club loan, this would mean I pay $775 in interest over three years. For a Prosper loan, I would pay $691 in interest. This is a savings of $84 for the exact same loan, a difference that would be even more dramatic if the loan were larger. It is important to point out how my experience between the two platforms may be different than yours (see PeerLender; he gets consistently better rates @ Lending Club). Every application is different.

#2. Prosper Funds Loans Faster (4 Days vs 6 Days)

When I applied for a Prosper loan, I received my money in four business days. I applied on Monday and had money in my bank account on Thursday, just four days later. Lending Club, on the other hand, deposited cash in my account in six business days. Including the weekend, this made it eight days, twice as long as Prosper.

In summary, if you need money fast then Prosper then may be a better option.

#3. Lending Club May Charge Lower Fees

Like we mentioned earlier, both the platforms generally take 5% of the loan as a fee (called an origination fee on Lending Club and a closing fee on Prosper). However, the platforms offer slightly different versions of this fee, especially for premium borrowers. Lending Club offers their best quality A-grade borrowers a fee as low as 1% while Prosper’s is 1.95% (basically 2%). So if you have great credit, you might go with Lending Club. Even this tiny 1% difference can mean hundreds of dollars in savings, especially for big loans.

#4. Prosper Has More Eligible States for Borrowers


As mentioned in the post Which States are Open to Lending Club & Prosper?, Prosper has more states available to borrowers than Lending Club.  If you live in Idaho or Nebraska, you cannot get a loan through Lending Club, but you can get a loan through Prosper.

Verdict: Both Lending Club & Prosper Are Great

In my opinion, both Lending Club and Prosper are great places to get a peer to peer loan. That said, each platform offers different benefits to different borrowers.

  • Do you have great credit history? You might want to check out Lending Club. They can offer you a lower closing fee than Prosper.
  • Do you need money fast? You may prefer Prosper. They approve loans quicker than Lending Club.
  • Do you have great credit? You may pay fewer fees at Lending Club.
  • Live in Idaho or Nebraska? Even though your state is closed to Lending Club, you can still get a loan through Prosper.

For a closer look at each platform, read my Review of Lending Club or Prosper Loan Review.

You can make this process a whole lot easier by simply taking two minutes to check your rate at both Lending Club and Prosper. After submitting some basic information like your name and yearly income, both Lending Club and Prosper will run a soft credit check that will not hurt your credit score. You then can see the rate that both companies offer, and pick the lower of the two.

Go with whoever gives you the best offer

Won’t affect your credit score.

[image credits: “Money, Money, Money” by Daniel Borman
Mother & Daughter” by Rolands Lakis CC-BY 2.0]


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  1. Karthi says

    Can I apply with both LendingClub and Prosper at the same time just to be safe and not waste time or will it affect either of the approvals and in the end, I get nothing?

  2. Robert Dowling says

    Are there similar sites to Lending Club and Prosper that offer loan amounts greater than $35,000? Thank you.

  3. Michelle says

    What is the turn around time for receiving your loan? I see on their site that things move quicker when you respond to their requests for more information. But my question is, say you submit a request on Monday, “normally” (with prompt responses from me) what’s the longest you’ve seen/heard it can take? Most personal bank loans are approved and the check cut in about a day or two. With Prosper, what’s the basic turn around time?

      • Dolores says

        To do list and forwarding documents done but no reply and it has now been since 11/04/14. on account activity screen indicates still being reviewed but loan status indicates removed. Is it being reviewed and if so how much longer before I am notified.

        • Rena says

          My husband and I applied at Prosper and was approved for a loan. We uploaded documentation as requested. I got an email that stated it was in the process. I was unaware that one of the documentation was not readable, but never received an email to tell me this. After a week I decided to call and ask about the loan. A rep told me what the delay was and I immediately sent another copy and call to confirm it was received. We receive the funds within 2-3 days. I would follow up with any company by phone to make sure they have everything needed.

  4. Bobby Tria says

    I am in the market for getting a loan, possibly through Lending Club, if this happens, will it effect my credit score/rating?.

    • says

      Hi Bobby. Applying for a loan does not hurt your score since they use a ‘soft pull’. Accepting the loan will result in a ‘hard pull’ that will lower your score slightly for a few months.
      Hope that helps,

  5. John says

    Soft pull prosper said based on my score they would only do 25,000. Lending club gave a quote for 35,000. Will you know in advance if they can fund it (the whole amount) or will they assume you will take a lesser amount? I really don’t want a loan for a lesser amount.

  6. Deshaun Lathon says

    To initially check is simply a “soft pull” and once the loan is accepted then it will be a ” hard pull” resulting in your credit score dropping slightly for a few months right ? What is the average time before you credit score stabilizes to the original score?

    I also read that the loan is considered an installment loan which means that once paid it will in turn boost your credit score right ? ( above what is was originally )

    • says

      Hi Deshaun. Everything you wrote seems true to me :) Your score will recover from the hard pull within six months to a year, though a record of the hard pull will remain on your report for two years.

      • New Jersey Guy says

        Simon….If the borrower is using the money to pay off debt, they could experience a sharp increase in their credit score in as little as 60-days. This will hold especially true if the money is being used toward credit card debt which is a major factor in determining a credit score.

  7. Kevin says

    Great Article Simon. Im self employed (5) years with a FICO average of 660. (Experian is 673). Has anyone applied and been approved that is self employed by Prosper/Lending Tree? Looking to consolidate and do a few biz upgrades and am curious as to what they will require paperwork wise. Thx in advance.

      • Kevin says

        Thanks again Simon. I was approved by Lending Club for up to $14,000. Great news! But before I accept I was wondering if my actual AGI (Adjusted Gross Income) will be a factor as it is very small after business deductions. My gross is over $90K before schedule C deductions. Any advice? Thanks in advance.

      • Jen says

        Hi Simon,
        I am considering Lending Tree for a debt consolidation loan. I am self-employed (have been for almost 6 years) and am wondering about how the approval/verification process will work. What particular pages of the tax returns did they want when you did it? Also, would I be able to submit copies of 1099’s as proof of income?


        • Jim says

          PROSPER treats self-employed as second class financial citizens. I put through a request for $350000 with FICO score of 730. Was approved for $35000 @ 10%. During verification they wanted a W-2, which, as a self-employed person (annual income over six figures, 100% verifiable) I did not have. They cancelled the loan (which was 100% funded in about 45 minutes) because they could not “verify income”. I provided tax returns, copies from irs website–everything. Result: no W-2, no loan. However, I was invited to apply as a “self-employed” person. Submitted the exact info, was told that I am now only approved for $15000 @ 14.5% due to my FICO score.

          Hmmmmm– my FICO score was exactly the same when I applied with “employed” status (meaning employed by someone else–you have a W-2 or pay stub). Now I was applying as self-employed, everything changed. Same income, same FICO score, same credit history, same EVERYTHING…but if you are self-employed your PROSPER outlook is not so rosey.

          • says

            Hi Jim,
            This is correct. If you are self-employed, your income is more difficult to verify, and thus you are a riskier investment all around. I wouldn’t consider it means you’re a ‘second class citizen’, more that you are applying alongside a population of borrowers who are more likely to default than everybody else.

      • Liz McPhail says

        My Equifax credit score 702 and TransUnion 696

        Does Prosper or Lending Tree use one or the other or both?

        Thank you

        • Ed Stanlay says

          Lending Club (not Tree) uses TransUnion, unfortunately.
          I think Prosper uses Experion.
          I was approved by Prosper and denied by Lending Club.
          The credit bureau they each use seems to make a difference.

  8. Celeste Gordon says

    I really want to use one of these companies but I’m scared to start the process. I have been trying to pay down our credit card debt but can’t seem to make the headway I want. This looks like a great solution. I guess I’m looking for advice – have others been happy with these companies? Help!

    • Kevin says

      Hi Celeste. I was really apprehensive as well but went ahead and applied with Lending Club on Friday. My loan request was funded shortly after applying. I am just waiting to see if they have accepted all the requested documents I sent them. Simon has screenshots of the exact process here so that was a big help in knowing what to expect. Best of luck!

      • Celeste Gordon says

        Thank you for your response. I am going to get my ducks in a row and get started. I absolutely detest my credit cards. There is a light at the end of the proverbial tunnel. Happy Holidays!

  9. Brenda says

    Hi Simon,
    Thank you for your “plain English” analysis.
    My question is… Can my husband and I apply for one of these loans jointly or would we be better served splitting the loan amount requested and apply separately?

      • Phillip L. says

        That puts me in a bit of a quandry. The credit cards are in my name, and I have the better credit score, but my wife make more than ten times what I make. I suppose we can both apply and compare quotes. Might be an interesting experiment.

        • Dave says

          Hi Phillip. I am in a similar position and am curious as to the results of your experiment. My credit score is great but my income is variable. On the other hand, my wife’s has a good steady income but her score is good not great.

  10. Nicole says

    Hey! Thanks for the awesome review! So I’m pretty much flat broke and I travel a lot, and usually have random season jobs, some under the table. On paper I am below the poverty line for sure! Oddly enough, I have a good credit score of 711, having a few credit cards, and I currently am about $5,000 in debt to, but am paying off etc. Anyway, my friend and I have an idea for a new business and I was hoping to get a loan (for $5,000 to $10,000) to get the business started, hoping of a quick return by the end of 2014. Basically my question is, what do you think my odds are of getting accepted for a loan if I can’t show on paper an annual income? Do they ask for papers to prove your income, etc? What do you need to show them?

    Thanks! I really appreciate it!

    • says

      Hi Nicole. I can’t say the odds, but you could always just check your rate and see what they offer you. Checking your rate is with a soft inquiry, so it shouldn’t hurt your credit score at all.

      • Crystal says

        Hi. I have a question, since you said if you check your rate at Lending Club that it doesn’t affect your credit score. What if you tried checking your rate like 5 times? Would it still be considered as soft inquiry? Because I checked my rate on different amounts (like $5000, $10000, and so on). Would it show in my credit report as 5 inquiries, or not?

        • says

          Checking your score is a soft pull and will not show up on your credit history, no matter many times you check it. That said, you probably will get the same rate either way so there’s not much use trying to check it multiple times.

  11. Mark says

    Great article. I recently took out a loan with Lending Club to pay down credit card debt. The amount they approved at the time allowed me to pay down off about 80% of the debt, and lower my monthly payments. As a result my FICO score has improved greatly (now about 750). I’d like to get the rest of my old credit bills paid off, and Prosper is telling me I would be approved. Is there any reason not to do a second loan with Prosper, as this will get all of my old things paid, result in lower monthly payments, and get me completely out of debt faster.

  12. Amy Davis says

    Hi. I just tried to check my rate on Prosper. I have a FICO score of 715 but Prosper says I’m too low for them. I’m assuming they want a minimum credit score of 720 since that’s excellent credit. Now I feel defeated and feel like Lending Club is the same thing. Any idea, because it doesn’t say on either site. Thanks.

    • says

      Hi Amy. The minimum credit score on both sites is 640, so there must be some other factor in your credit history that is making the platforms deny your application. You may want to check your credit history for any negative marks and see if you can correct them before applying again.

      • suprnova says

        Well I was just turned down from both for a loan of 16,000, you say 640 is minimum, Lending Club just said my score is 655. I’m trying to get a handle on my finances, consolidate all my debt into one payment, as of now I pay out close to 1700.00 a month in credit cards and loans and have for 2-3 years, never late on any but just keep getting turned down. Very disappointed just trying to do the right thing and save some money.

        • KennyB says

          What did you figure out suprnova? I’m in the same boat, $1700/month minimum payments. Nothing leftover to pay down balances. I have a 686 FICO and never a late payment in 20 years. No other bad stuff on my credit report, except high CC balances. Turned down by Lending Club. Prosper offered $10K at 25%. I have no collateral to get a bank loan.

          I’m beginning to think bankruptcy is the only option, unless I stumble upon a briefcase filled with 80 grand this weekend. My girlfriend won’t hang around if I can’t put any money into getting married. And I don’t want to lose the best thing in my life because I’m paying off failed business ventures and debt from the unemployment debacle of 2009-10.

  13. CindyM says

    If I am a caregiver for a family member (re: self employed, no paycheck, no taxes taken out), how do I prove my income?

    • says

      As long as you paid taxes on your income, they may ask you to submit the cover pages of your 2012 return, pages which contain the figure of your yearly salary. Of course, this is different for everyone. Cheers, Simon

  14. ken says

    I got a pre approved letter from Prosper in the mail and applied online, filled everything out and said my loan was ready for funding. And got an email their sending post card for address verification?…i guess im not completely approved yet?…I have not given my bank info, acc# and routing #yet as im leery that they have this info when my loan is not approved yet?

    • says

      Hi Ken,
      You can feel safe about submitting your bank info to Prosper. They are a good loan company with solid site security. They simply need your bank info and an address verification postcard in order to prove your identity (somebody should be calling you on the phone as well).

  15. Arlene says

    I recently received offers from Prosper and Lending Club, actually within a few days of each other. The offer stated that I am pre-approved; however, I am reluctant to apply to either because I do no want to damage my already improving credit. My credit score with TransUnion is 698, with 0 late payments in my entire credit history. The only problem is that I filed Chapter 7 in May, 2011. Do I even have a chance at securing a loan?

    • says

      Hi Arlene,
      I’m not the authority on who gets approval from them, but what I can say is that they have approved people with credit scores as low as 640, as well as people with past bankruptcies.
      Hope this helps,

  16. Jennifer says

    Firstly, thanks for this article. I was really doubtful of Lending Club and Prosper being legit companies. Me and my husband need about $15k to do some debt consolidation. I lost my job a few years ago and we are finally at a point where we are paying things off and have already paid off close to $10k in the last couple of years. I am a stay at home mom and he is employed and made $92k this year with over-time. I guess my question is, can I qualify if I use our tax returns as proof of income? I have the better credit score, mine is 695 and his is 655. The only thing holding my score down is our debt, where he has some old delinquent things on his score. We also each have 6 hard inquiries because we’ve been trying to consolidate this debt for a while. He has applied to Prosper and the max they would give him is $10k. And the interest rate is crazy high!

    • says

      Hi Jennifer,
      When I applied for a peer to peer loan, the tax returns were one way they verified my income, so they may do the same for you. Nice job paying off your debt. I hope a p2p consolidation loan adds some much needed breathing room to your life.

  17. Adam says

    I am looking for an unsecured loan for home improvement. I really don’t have a lot of equity in my house( due to home values dropping). I have some questions.
    1. If I apply at both companies can I reject the one that has the higher interest rate or am I automatically locked in the accept?
    2. Will applying to both companies affect my credit scores drastically?
    3. Is there a place on the application to include my wife’s salary? She makes a lot more money than I do, but would to include both of our salaries.

    • says

      1. Yes you can check your rate at both and go with the lower rate – there’s no commitment for just checking your rate.
      2. Checking your rate does not affect/hurt your score. Getting a loan from both companies would affect it, but it would be positive/negative depending on your situation.
      3. There are no joint applications.

      Hope that helps,

  18. John says

    Hey Simon. Thank you for the good and easy read.

    I just took a loan out from LC for $7000 and they gave me the rate at 9.98%. It was approved in one day. However, they didn’t ask for any paper verification. They just had me do a phone verification and email verification.

    I will follow up and confirm how long it takes to get the fund to my account.

    Bye bye high interest cc.


  19. Carl says

    I was in business for myself for a number of years, and thus my credit history is only OK (I’m since ‘retired’ and on SS, but I do have some additional income as well). We usually put our purchases in my wife’s name since she has better credit but only supplies about half of the total family income. My question is, can we apply as a couple or should we only use her credit. We want to pay off credit cards as well as provide for a kitchen remodel, so we probably are looking for a max loan.

  20. Nichole says

    I am interested in borrowing money from either Lending Club or Prosper. However, I am concerned about information (my SSI, banking account # and W2) I will provide to these companies. Who will get my information and how is it protected? Since the companies are based on peer to peer investment, how much of my financial information are they given?

    • says

      Hi Nichole. No need to be worried about Lending Club or Prosper’s site security. Both their sites promote the fact that their servers and databases are secure against unauthorized intrusion.

  21. Michael says

    Hi everybody, I am almost sure I am going to be approved for a loan of three years term with Prosper, but my question is, can I pay back the money I received before the end of the term?, let’s say maybe in a year and half or maybe two years to avoid paying more interest? Please help me understand a little bit better about this, thanks

  22. sg says

    Did Lending Club lower their minimum FICO score requirement to 640 recently? If so, is this to better compete with Prosper who has been advertising a lot lately?

    • says

      They did indeed lower their minimum FICO. Why they did this is anyone’s guess. My opinion: both in response to competition from Prosper and opportunity to issue more loans to people. A whole market exists for 640-660 borrowers, and they are keen to figure out how to enter that space as well.

  23. Char says

    My credit is score is in the low 600 with a high debt ratio, but I pay all my bills on time. I do have some old medical bills with neg and in collection. Do think either company give me a loan. Thank you so much for all the advice.

  24. Allison says

    Hi, Simon! Thanks to all the information you have provided I feel a lot more comfortable with peer-to-peer loans. I’m going to apply for the lending club loan but because the future is unforeseen, I want to know what happens if I cannot repay a loan. I plan in using this for debt consolidation/refinancing, and I pay a little more than the minimum on my four credit cards now, but I’d like to get them all paid off and just paying one bill, with a lower interest rate. What are the penalties if, for example, I lose my job and am unable to make payments for a few months? Also, you mention in someone else’s comment that Prosper allows early repayment, but I wanted to verify the lending club does as well. Thank you so much!

    • says

      Hi Allison. Both Lending Club and Prosper allow pre-payment. With Lending Club, you simply have to call them and set it up over the phone.

      As for what happens if you cannot repay, your loan will go into collections. You’ll have a lot of calls from the agency trying to get payments. Eventually you’ll have a really nasty credit score, which will make it hard to get more loans in the future. I would not get a loan if you were doubtful you could pay it back, but also know that it’s not the end of the world if tragedy strikes and you fail to pay the loan back. Peer to peer loans are unsecured, meaning your house or car is not collateral in case you stop your payments.


  25. Sage says


    I have heard that consolidating your credit cards can negatively affect your credit score- is that true?

    • says

      Hi Sage. Everybody’s situation is different, so what I say next is really just my opinion: what many people appreciate is consolidating at a lower rate, which allows them to save money and pay off their debt at a more reasonable calendar. And when all debt is paid off, credits scores often improve.

  26. Gigi says

    I have just gotten an approval of a loan with Prosper and am sending them the required paper work. Does approval and 100% funding mean that they will not come back with a higher interest rate than they offered in the beginning once the documentation is submitted?

  27. Mosa says

    Would it be better to apply for a large loan amount from either LC or Prosper, or divide the amount into two smaller loans? One from LC and the other from Prosper.

    • says

      Hi Mosa,
      The answer to that question is highly dependent upon your isolated situation. I would recommend you consult a financial professional. Personally, I would take out my own single loan because the payments would be in one place, but your needs may be different.

  28. David G says

    I was just declined outright by Prosper for a debt consolidation; I had pulled current scores and reports from all three bureaus at myfico.com and they ranged from 704-731, with zero derogatories, and never a late payment. I make $113K per year. My credit card utilization is higher than it should be, hence the reason for looking at a debt consolidation loan at a reasonable rate. Only one inquiry, and one new account opened in the last year. Have owned my current home for over 10 years, and 14 years in the same job. I’m completely puzzled.

    • David G says

      In the denial message, they show the same score I have for Experian, 710. I scored lower compared to other members because of my revolving balance (which I expected, but it’s not abnormally high), and get this…too few fully paid Prosper loans. I’d never even heard of Prosper before today…so that last one is actually quite funny.

        • David G says

          Meanwhile, Lending Club approved, and it fully funded in less than 48 hours… got final approval this morning. Reasonable rate, enough to where I’ll still be saving a decent amount of $ by paying off a few credit cards.

  29. Chloe says

    You mention that only the inquiry remains on your credit- do they not report the loan on your credit as well? Sorry if I missed this in the article or comments somewhere.

    • says

      Checking your score is a ‘soft’ credit pull that does not affect your credit score. Actually getting a loan results in a ‘hard’ pull that is reported to all the agencies.

  30. Edward says

    Great article. I have a good credit score (711) but high debt-income ratio. Are they checking for my debt-income ratio also? Thanks!

  31. Randy says

    Once a p2p loan has been obtained:

    * will it show up on your credit report and affect DTI ratio?
    * if so will it show up as a installment or revolving account?

  32. Ray says

    Hi Simon,

    Thanks for a great and insightful blog article. I applied for a loan through Lending Club yesterday and have submitted all of my necessary documents and verification items. When logging into my account my application status is under review and loan status is in funding with 19% of my request funded. When it reaches to this stage does it usually mean that the loan is pretty much going to get accepted or is the process still a long way to go. My loan request was pretty modest and my credit rating through Transunion is currently sitting at 735. Please advise and thank you in advance!


  33. Kim says

    I need some help, I’m looking to pay off some payday loans I’ve accrued as well has have a little cushion left over. I’m a single parent with a decent career but my credit score is in the toilet! I know these places won’t approve me, I’ve tried my credit union, etc. Is there any help or am I just doomed? By the way, informative article

    • says

      Hi Kim,
      I can’t give tailored advice to your situation, but many people have improved their credit by paying off old debt through increasing their income and reducing their expenses. Hope that helps.

    • Sue says

      Kim, about 5 years ago I had about $20k in payday loans. Out of desperation I cashed in my pension and paid off half, the other half I was able to pay off through a debt relief/counseling place (In sorry, but I can’t remember the name). It wasn’t a loan, so I didn’t get the extra cushion, but I was able to pay them back at a reduced settlement without the crazy interest fees. Everyone says those debt counseling places kill your credit rating, but in 5 years I have recovered from a 450 to a current 690. It takes time, but given your situation it may be worth looking into.

  34. Ed says

    Hi Simon,

    I too was pretty dubious about this, I kept getting pre-approved offers from Prosper in the mail, and just threw them out. After deciding to do some research, I found your article. I applied to Lending Club in the end. Better interest rate on a higher amount to borrow. I have a decent credit score close to 750, however I have A LOT of DTI issues with my two credit cards. Both are almost at their limits, which are high. One is 30K and the other is 23K. I have been reluctant to apply for any credit cards to consolidate because of my DTI, but I pay everything on time and more than required. I also make a decent amount for my job. Do you think it’s likely I will get denied based on this. It worried me after reading one of the blog inputs about someone like me, getting denied for high DTI. I don’t want this to affect my credit score and am wondering if I can cancel. Might be experiencing “lenders remorse”! I just started the process today. Thanks.

    • says

      Hi Ed,
      I can’t comment on your individual situation, but I can say that sites like Lending Club are extremely good at finding a reason to approve people. Their evaluation of a person’s credit worthiness is extremely precise, so if you were able to get a good rate quoted to you from Lending Club, they likely took a cursory look at your DTI and found it within their risk tolerance. If you got a good rate from them, I find it a distinct possibility you could get this loan, and moving from credit cards to a fixed-rate installment loan like these seem a very positive change for almost everyone who does it.
      Hope things work out,

      • Ed says

        Thanks Simon, I guess I had no need to worry I was fully funded by one investor within an hour of applying for quite a large amount at an excellent APR. Much better than my credit card which is stupidly high! Thanks for your reply and I hope to pay this off quicker than the three years. Yeah!! Reducing debt. Really appreciate your comments and comparisons of the two companies.

  35. Bruce Williams says

    I currently have a loan with Lending Club. Easiest loan I have ever gotten. The lending club was courteous and friendly. My question is: can I add to my current loan? And if so, change the pay off years from 3 to 5?
    Thanks, Bruce Williams.

  36. Enyko says

    I’m a small business owner and have yet to file my 2013 taxes. Will this be an issue? Do they require tax returns to verify income?

    How do they verify income? Although I take large monthly draws from my business account, my salary is low. Will they look at both salary and draws?


    • says

      I cannot speak to the particulars of their income verification, but I can say that W2 verification is pretty common. If you’re self employed, then previous tax forms are pretty standard. But your process may be different.

  37. Christy says

    If you don’t get funded at 100% do you have to accept the loan? For example if it is 70% funded can you decline it?

    • says

      It depends on the platform. Lending Club has, in the past, allowed people loans who only got 70% funding. However, it seems *all the loans are currently reaching full funding (if they complete verification/approval), so I wouldn’t worry about this question.

  38. DivorcedDad says

    Hi all. Wanted to sum up my experience with both to reiterate Simon’s statements. I had a grueling divorce which left me holding the bag with high debt. I had low score (655) because I could not get a handle on two households and income. I applied for a loan at Lending Club and loaded all the documents they requested. Loan was for $10,000. It was in my account within 4 business days.

    I just applied for a loan with Prosper and was approved up to $35,000. I have loaded all documents and it is has been idle for 3 days but fully funded as they verify documents. I did place a call and they are highly busy with application verifications and assured me they would be as quick as they can but have overwhelming volumes. I understand completely and will keep everyone posted.

    Both sites are reputable and pull money direct from bank account. One down side to Prosper is that Lending Club allows you to make a one time change to your payment date, which is very helpful to align up to payroll, especially when you get paid twice a month and first check goes to house bills. Prosper is looking to do something similiar in future. In the meantime after your first payment you can change to manual payments, but it still doesn’t fix the date issue.

    Hope this helps everyone. I would recommend everyone check your scores from AnnualCreditReport.com to ensure there are no derogatory marks on your account. Prosper looks at the last 12 months, so this will save you time or dissappointment when applying and being denied. Rate check will usually check that for you though.

    Good luck all and goodbye to high debt!

  39. Kimberly says

    I have a lending club loan but I am wanting to do some house improvements so I want to get a loan with propser. Can I do that do? I have excellent credit 748 with only 2 credit cards and vehicle loans.

    • says

      Hi Greg. I have no idea. Lending Club & Prosper have both approved loans for people with past foreclosures, but as to your specific situation I recommend you check your rate with both and see what they say.

  40. Caleb says

    I am trying to get a car for $55k. I have a solid income and above 640 credit score, but I am a first-time buyer. The dealership said they would let me auto finance for $26k. Would it be possible for either lending club or prosper to loan me the remaining half?

  41. Jason says

    Good morning Simon. I’m sure you have answered this same question dozens of times, but I’m going to ask again. What paperwork should I submit when Prosper requests bank ownership verification?

    Thanks in advance.

  42. Chase says

    Does anyone have experience with the lending club funding process? Yesterday my loan was at “approved” status with 5 days remaining and funding at 0%. This morning status still shows “approved” and funding at 0%, however the remaining days have increased to 28 days and 17 hours. Any insight on funding timeline here?

  43. Elizabeth says

    I’ve been trying to apply through prosper for a loan to build a tinyhouse but since I’m technically unemployed I can’t get approved. I have the good credit but am currently stay at home mom with a baby and my husband is the one working on building his back up but has the income. So will we just have to use his to get approved…possibly get approved I mean?

  44. Dean says


    I am considering a personal loan from LC or Prosper for the simple reason of adding cash to my personal investment account, then pay my sons college expenses next year when he starts. Any idea if the reason for the loan is a factor, or do they primarily fund card consolidation reasons only?

  45. Ralph says

    I was just approved with a credit score well over 700 @ 12.64% (16.26% APR) on a 12500, 3-yr loan. It was considerably more if I took more or went 5 years. I’ll stick with Bank of America’s Credit Card @8.25%, Discover’s 9.24%, and others under 10%. I’d like to know if I can invest my IRAs (and eventually other retirement money) into peer-to-peer type of lending, and if so, how one would go about it.

    • says

      Thanks for sharing Ralph. While most people do get a lower rate at Lending Club and Prosper, some will have better cheaper options elsewhere, and it sounds like you’re one of these people.

  46. Christine says

    My husband was 100% funded threw lending club but then was denied due to income ratio with high debt, I was able I get a loan from them and consolidated about 8,000 of his debt into my loan. We paid off the remainder of our car balance and 4,000 in just his credit cards. How long till he can reapply? We still have some debt that we would like to consolidate and make just 2 easy payments and save money from high interest credit cards. Would it be better if he tried prosper and should we at least wait a month till they report on credit his score was a 669 when they pulled at lending club.

    • says

      Hi Christine. I can’t speak to your particular situation, but some borrowers have gotten approved through Prosper even though they were denied by Lending Club. Hope that helps. Simon

  47. Connie says

    I also had received several mailings from Prosper and decided to check into things further. So glad I came across this site. I applied with Prosper just to start and received an excellent offer. We will see what happens over the next few days. It appears it can take up to 14 days for some loans to receive final approval. Does the rate we have been initially offered (pre-approval) change if person(s) don’t come forward to back your loan?

  48. FR says

    My application was denied with Lending Club because I put my yearly income from 2013, at that time I was not making much money and only working part time. I was asking for a 3500 loan to pay off some credit cards and was denied. Do you think it would be best for me to re-apply once I have a better income from 2014? how long should I wait to re-apply.

    I was going to apply with prosper but Im thinking I will probably get denied for the same reason my credit score was decent 708, I think the issue was that I put what my income tax said I earned in 2013, I didn’t want to lie.

    My last question would be, will this initial application denial show up on my credit and will it lower my score.


    • says

      Hi FR. While I can’t speak to your particular situation, it would make sense that your chances of approval would go up if you have better income. If you foresee yourself earning more in the future, perhaps wait until then to apply. As for denials showing up on your credit report, just checking your rate (and being denied in this way) only does a ‘soft check/inquiry’ that does not appear on your public credit history.

  49. Wade says

    Hi Simon,

    Do you know when the hard pull on your credit occurs with Prosper and LC? Is it after your application, before being funded? Or only after the loan is fully funded and accepted? Thank you!

  50. Kyle says

    I applied to test the waters with Lending Club to see if it is something I would like or not…I love it! LC is GREAT. Super friendly customer support and I like the email support. They have answered every question I had and I only took a small loan to try it out. I will say that a negative I have found is that they will not grant a second loan until 6 months after the first loan has paid out…I have good credit and wish I would have asked this question before being locked into this. I am also getting ready to use Lending Club to do some major purchases and am thankful this is available. I was fully funded in 1 day and had the money 4 days later. Worked great for me.

  51. Teresa says

    Hi, Simon, this seems like a stupid question, but I haven’t seen the answer anywhere: is a p2p loan considered taxable income for the year in which it is funded? Thanks for enlightening me…

  52. adam says

    im kind of in a weird spot. i was approved for my loan of 16000 but the requested tax forms and some irs paper work that i dont have. i work for a contractor that pays me and has been paying me under the table for a year or so now cuz its not full time work, and because i am in the process of starting my own business. i make around 40k annually, but on paper i have no income. i just curious what you recommend to do for the papers they requested, and if i even have a chance getting my loan finalized. i have already sent them my bank info.
    (routing # and account #.

  53. Oliver says

    My question was where should I apply for a loan on Prosper or Lending Club? I already have a personal loan from Citibank $10k and I have a auto that I owe 10 k .. on credit cards I do not owe nothing. Credit cards is good. But I need a little bit more of money to pay medical debt. I make $ 60,000 a year. With all this where is more probabilities for me to apply and get approved on Prosper or on Lending Club?

    • says

      Sorry Oliver, but there’s just no way for me to know the answer to your question. However, checking your rate with either to see what they might offer you does not hurt your credit score.

    • Pariah says

      You may want to see if your credit cards offer promotional 0% interest for 12 months or so for purchases or transfers. If not, consider getting a card that does. Some will go as far as 18 months, which should give you a long window to pay down that bill at a far better rate than these lenders.

  54. pattycakes says

    Simon, if you already applied to Prosper and you receive an email that your loan is 100% funded you are just going through the review process and stumble onto this website and find that Lending Club gives you a much better rate, would it hurt your credit score and your chances of getting that lower rate if you cancel prosper and switch to Lending Club?

    • says

      Hi Patty. I can’t speak to your particular situation, but if any borrower going through the review process with Prosper, they’ve probably already been hit with a hard credit inquiry. This would likely mean a lower interest rate at Lending Club, though everyone’s experience is going to be different.

      • pattycakes says

        Thank you Simon, if I understand you can have a loan with both?

        Why would Lending Club give a lower rate with a hard Prosper inquiry?

        • says

          More inquiries on a borrower’s account is indicative of less creditworthiness. Basically, if somebody is taking out a lot of loans at once, they are less trustworthy of an investment than those who have simply taken out a single loan.

  55. Matt says

    Is Lending Club or Prosper more friendly to a 2 year old BK on record or both the same. I have a 660 across all three credit agencies with very low DTI

  56. Lindsay says

    I was approved at lending club but not prosper. Credit score 685-695. Prosper informed me that I had too many credit accounts at or above 90% utilization over the past 6 month period. This did not come up at lending club. I think that might be an area in which the two lending companies differ on approval criteria.

  57. laura says

    i am going through this process with lending club. i have completed their “to do” list, and the loan ($28K for credit card debt consolidation) has been 100% funded. My current status is “final review”. what does this mean? they have asked for no documentation, i work for myself, and have a high dti ratio (thus to need for the loan to get the cc debt under control). would i get declined during this “final review” time? googling has indicated that sometimes the lenders ask for more info, but no one has asked me anything yet. i’m just wondering if this has been a futile effort? or is this really going to pan out? thanks!

  58. Susanna says

    I posted a question earlier but have an additional comment to add on this same topic. I have been researching Prosper and Lending Club for DAYS now. Blogs, articles, reviews, BBB, the Prosper and Lending Club websites…I have not seen one mention of this finance charge. Only of the origination fee. This makes me even more confused. Is it just me and me sitation that caused a finance fee? Am I misreading that fact that I am requesting $11,000 and will be paying back over $16,000? This feels VERY deceptive. Is it legal? Who in the world would take on an additional $6000 above the loan amount?

    • susanna says

      I belive I have my answer. The amount that includes the $6000+ is what I would have to pay off, with interest, if I paid as scheduled with no extra amount going toward principle and not paying off early. This is the same as any credit card out there. Of course, if I paid it off early, no as much interest would accrue and I would not be paying that full $6300…it would be based on how long it took me and how much interest accured in that time. They use the term finance charge and origination fee a couple times in an inconsistent fashion, which makes it confusing.

  59. pattycakes says

    Thank you Simon, got my loan approved from both but went with Lending Club since their rate was much lower than Prosper.

  60. Pariah says

    A couple thoughts I’d point out –

    1. If you want more than 35K, LightStream (a division of SunTrust Bank), does unsecured loans up to $100K.
    2. Not all sites do soft pulls. LightStream does a hard pull. Banks often do. It might be worthwhile before applying to some of these to inquire if they will make soft or hard pull on credit.
    3. While many folks are trying to reduce credit cards, and opening a new card does slightly hard hit your credit, you may want to get one of the cards that offer 12 to 18 months of 0% interest on balance transfers. 0% is much better than the rates these lenders offer. A short-term ding to the credit doesn’t matter much if it significantly helps you address your larger interest debts. By making it easier to pay those debts, you actually rebound and improve your score quicker. As an added bonus, the extra amount of “available credit” the extra card offers lowers your credit/debt ratio which improves your score as well (ie if you owed $5K on a total of 10K credit your ratio is 50%, but if you get another 10K available credit your 5K debt is only 25% ratio which scores much better).

  61. Digging Out says

    Received three checks across my account summary page last night and this morning when I signed on I received a pop-up window congratulating me on being not only approved but fully funded and stating my funds are on their way.
    My Credit Score is 677, I requested $15M and received a rate of 9.99%. I was asked to verify my email and my bank account only. I will post back when the funds post to my account.
    Application date 02/24, approved and fully funded by end of day 02/26, funds set to deposit 02/27.

  62. Li wright says

    I would like to become a lender. What is the minimum amount I can deposit into a LC account? Pls em.

  63. Tina says

    Hi Simon,
    I’m getting ready to apply for a home mortgage within the next couple months but I have credit card debt. I’m considering getting a loan from prosper to pay the credit cards off, but I’m worried taking a new loan right now would hurt me with trying to get a mortgage loan. Do you think it is smarter to keep credit card debt, approx 10K, or show 0.00 credit card debt but a 10K installment loan ? Also, I don’t know if 1 hard inquiry would hurt the loan process as well. Thank you !!

  64. Jim says

    Is there any downside to applying to several of the P to P websites that offer a soft pull at one time? Are lenders able to see 4-5 soft pulls within a few hours, and if so is this a negative as to their decisions?

    Also, any info on SoFi, upstart, or any of the other sites that have sprung up?

  65. jose says

    How do both verify my income? I applied for a loan with prosper, but most of my income comes from my full time job and other part cones from an online business I have. The only thing I have to prove my online income is a tax form I used to pay for those taxes that’s about it. How can that be verified?

  66. peter says

    good morning and I approved a loan of 10000 prosper 16.7% in payments for three years, with monthly installments of $ 352, my question is if I want to pay the $ 10,000 in the first year would have to pay the full interest the three years or only corresponding to the first year, thanks

  67. Tony says

    Thank you for this great article. I attempted through Lending Club, with my credit score of 820. For a 15,000.00 they wanted to charge me 17 % for 3 years, and 19 % for 5 Years, at a salary of 45000.00. I discarded the process after repeated attempts to call me, and have a pesky sales person bothering me every day. Got a flyer in the mail from prosper, applied for same 15000.00, and for a 3 year got a 14 % but for a 5 year got a 9.8 % Sent the information they requested, and by 5 that afternoon ( Thursday) was notified my loan request was accepted, and the funds would be in my account in two to four days. We shall see.

  68. kevin leroy says

    Would it better if I got a prosper loan at 6 % interest to pay off my lending club loan that is at 10% ? Also I have a credit score of 759 but an old traffic fine from 1991 has been sent to collections but I’m trying to work with them to pay it off. If my credit score goes lower after I take the loan can they raise the interest on me? Roughly how many points is your credit score lowered by having something go to collections? Thanks in advance.

  69. Lewis says

    I work for a small office where boss handwrites our checks. Prosper will not accept handwritten check stubs unfortunately and would not give me an alternative.

  70. Ken says

    What payment options are available from Prosper? I was surprised when my Lending Club loan hit me with “we only do automatic withdrawals from your checking account.” There was no option on the LC web to keep my checking account in there, but initiate manually (like you can do at Wells, BofA, AT&T, Verizon, Discover, etc.). And if you turn off direct withdrawal automation, LC will charge you $15 for every monthly payment you mail to them by check. Bizarre and antiquated to say the least.

    How does Prosper handle a customer payment model? What are their options?

  71. D. M. says

    This was one of the easiest loan transactions ever. I applied online after getting a mail offer; I was “pre-approved” (got a rate, term and loan amount) within 24 hours, sent in my required paperwork for their review, which took 4 business days (they state it will take 3 – 5 business days), got a call to confirm something on my pay stubs and she approved me right over the phone. I will have my money in 2 – 4 business days. They were polite, answered all my questions, and moved quickly. Everything was done in in the amount of time they promised. And now, our wedding is paid off! No more high rate credit cards!

  72. Marianne says

    Just got a Congrats letter that I have been approved. They didn’t ask for anything other than to confirm my email address. Is that letter for real? I went through Lending Club.
    Thank you..

  73. Ryan says

    Hello, just wanted to add my experience with Lending Club. While they claim an average of 7 days, I think it is probably much, much longer depending on the loan amount. We are on day 26 in our Lending Club application process. We were very diligent in returning/submitting all documents (which were excessive in our opinion). All our documents were submitted within 10 business days. In fact, everything but the IRS release form were returned within 3 business days. The IRS form was submitted on day 10 because they didn’t ask for it until that point.

    This loan is for $35,000. We make well north of $500,000 annually and have a credit score over 700 with no missed payments or write offs. If we would have known they take longer than a brick and mortar we would have looked elsewhere. They claim they are waiting for the IRS to return our tax returns to them (returns that were submitted by us on day 3 and were professionally prepared by a CPA firm, but that wasn’t good enough apparently)

    So, be careful using Lending Club if you need money fast and I assume the vast majority of people using peer to peer lending need money fast.

  74. David says

    Hi Simon,
    I am hesitant to apply for one of these companies because although I like the 3 or 5 year loan, I really would like to pay as much money as I can to get it paid off faster. I work extra jobs and am currently putting all of those checks each month into my CCs but the interest rates are hurting. I guess my issue is I am getting mixed comments about loan pay off early and fees. I copied this from Prosper’s site itself but do not really understand it.

    Can I pay off my loan early?

    Yes. If you are going to make a partial prepayment or pay off the total amount of your loan, go to “My Account >Borrowing” and click “Make Payment.” There is never a fee for making prepayments or paying off your loan early. If you are paying off your loan in full, the principal balance, along with any interest accrued to the date on which the payment will be initiated (which may be one or more days in the future), will be added together to determine the amount required to pay off the loan.

  75. Tim says

    I live in Pennsylvania. Prosper said I could not be a borrower in this state. I thought that was fixed a year or two ago with the addition of that partner bank?

    • Ml1382 says

      Hi Simon,
      I applied for a loan through lending club. They said I was approved and I returned all documents they needed. They also said my loan needed to be reviewed. I’m confused?? Was I approved or not?

  76. Ken says

    I recently received a pre-approval letter from Lending Club, directing me to myinstantoffer.com to get a quote. I was little surprised to received such an offer because my credit is just fair with a FICO score of about mid-600s (barely make the cut) and have very high credit card utilization ratio. Since checking rate doesn’t hurt (soft pull, rite?) so I pull a trigger anyway for a $10k consolidation loan (credit card plus another high interest personal loan). It turned out I received a list of offers from $2K to $16K, with the interest rates of mid-teens (not that bad given my circumstances). My questions is: how likely I would get formal approval and have the loan funded if I proceed my application. Would I get denied afterwards?

    • Kim says

      I am at the same point. 650 credit score, and 60% utilization. Said loan was 100% funded today (7/1). Already did employment paperwork, email verification and checking count verification. Not sure how long it takes but it seems they are slammed with loan requests. Good luck to you!

  77. Jean says

    I applied for a loan with Lending Club for $10k. My credit score was around 688. The process was easy and no documents were required to my surprise. My rate was around 9% and the money hit my bank account within 2 days. It was fast. Recently, I applied for a $4k loan with Prosper. I was approved and funded but required documents. I immediately uploaded my W2 and Pay Statement, within hours of getting the email. It’s day 3 now and my documents are still in “Review”. I am waiting to see what happens from here and did not realize they will do a hard hit on my credit as Lending Club did not, or at least it’s not showing in my credit report. I’m kind of biting my nails now to see what happens next. I was under the impression that once it said 100% funded, that would be the end of it. I’m still waiting for the postcard to show up. Having said all of that, my rate was lower with Prosper at 7+%. We shall see if that holds.

  78. Troy says

    Your loan has been approved and has been 100% backed by investors.

    We plan to transfer the funds to your bank on 07/07.

    Please note that your bank may take up to 4 additional days
    to show the money in your account.

    Thanks again for choosing Lending Club
    Does this mean I am really done?

    • Chance says

      I can’t prove my income, but have $32k in credit card debt I’d like to consolidate. What should I do

  79. Jacqueline says

    I received a pre-approved letter from Prosper. Last I checked, my credit rate was below 640. I would like to apply, but not if my application has no chance of being accepted. To your knowledge, have they ever made exceptions to this credit requirement?

  80. harris says

    My question is, I’m self employed with a credit score 820, can I download my tax infos forms and W2 from IRS site to show LC as my income verification?

  81. Carol says

    What credit reporting company does Prosper and Lending Club use? I have a higher score with Experian and Equifax and Transunion are always much lower.

  82. Ben David says

    Hi Simon,

    This is a great article. What about companies such as Upstart Network? They seem to take the best of these companies and use alternative methods to underwrite loans. Will you write an updated piece for the new market of lenders?


  83. Mark says

    Prosper said I’m approved on phone based off income and years there. They took my bank routing number over the phone. The guy said they take bad credit sometimes. Everything I read shows credit score must be 640. I go through app process on line choose my credit score range to submit and takes me from prosper to am one. Guess the guy in the phone doesn’t know his stuff??

  84. Pamela says

    I recently received offers from both companies. Lending club denied me.Prosper accepted me.i am self employed and was not asked for any documentation beside proof of bank account ownership. I provided my documents quickly. My credit score is in the 650’s.
    I have to say,dealing with Prosper was easy and quick.i should be getting the money in my account in the next couple days. I would absolutely recommend Prosper to anyone.Im using it for debt consolidation. Its a huge relief to be on my way to paying everything off.at a much lower interest rate than i had on my credit cards.

    • Chance says

      Question – What was the size of your loan and what payment plan did you use 36 or 60. I’m trying to get a loan, but cant prove my income. Thinking maybe they don’t request documentation on smaller loans

  85. Yodi in MIami says

    I’m in my 50s and been unemployed for about 2-1/2 yrs, however, because I receive money from my ex on a monthly basis, I have not been late with my payments once since I stop working. Unfortunately this has led my credit amount vs debt ration to increase so even though I pay all my bills on time, I have maxed out the 3 credit cards I have and Id like to consolidate all 3 which total in individual payments about $350 a month. Will I be able to qualify for a loan on account of my unemployed situation?

  86. Antony says

    I applied for a loan with Lending Club but the very next day my credit score went from good to excellent. So I withdrew the application and made a new enquiry for the same amount. The rate quoted was a full 2% HIGHER than in the initial application? What has happened here? I wrote and asked this same question and did not receive a response from Lending Club.

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