The security of our lenders is important for us. Therefore we have implied various risk mitigation mechanisms to help protect your money against risk of loss.
The PeerCredit provision fund will have an initial £15,000 which will serve to cover any potential capital loss due to poorly performing loans. Each time any repayment is more than 2 months late, the fund automatically delivers the corresponding amount to the lenders (should there be sufficient funds). The fund is constantly replenished by contributions charged from borrowers with each repayment.
Full and dynamic diversification
We use an innovative method to diversify your portfolio. As you invest, you obtain a share in all existing loans on the platform and each time a new loan is approved, you obtain a share in the loan. Thanks to this, the risk is distributed among all active lenders on the platform. If a repayment defaults and it cannot be covered by the provision fund (which we believe is unlikely but can happen), each lender only loses the amount corresponding to their share in the whole lending pool. For example, if your share is 1% and a loan of £2,000 defaults, you will lose £20.
At PeerCredit, your capital isn’t linked to a specific number of loans. Instead, it dynamically moves across the platform.
Proper credit check of borrowers
Before we approve someone for a loan, we check their creditworthiness using various sources of information. We have developed an innovative credit check procedure that combines standard approaches with cutting edge fintech trends such as behavioural scoring. This means that you invest only in the loans of people who have proved to us that they can repay the loan.
Please be aware that your invested capital is at risk. There is no FSCS protection on loans and instant access is not guaranteed. You can read about the risks accompanying peer-to-peer lending here >>