Our sophisticated credit assessment and affordability checks allows Fund Ourselves to gain a highly accurate prediction of the borrowers’ likelihood of defaulting. We aim to achieve our target average default rate by being selective of who we accept as a borrower on our platform. In the event we see our average default rate approaching our target average default rate, we close the lending door to riskier borrowers by tightening our credit assessment and affordability criteria.
Fund Ourselves only accept borrowers with an estimated default rate of up to 15%
. We are targeting an average actual default rate of under 15%. We are aiming to achieve our target by maintaining the balance of high risk and low risk borrowers to be lower than the
target average using our comprehensive credit and affordability assessment.
Platform statistics are available for registered lenders.
We do extensive checks on our borrower to verify their creditworthiness before issuing any loans. Our checks start with our internal checks, ID and background checks to filter out borrowers not meeting our lending appetite like bankrupt individuals for example. Verified applicants are then screened for fraud and money laundering (AML) which helps us keep unwanted activities off the platform. Once cleared, applicants are credit scored and their affordability is checked to determine their creditworthiness which is the final stage to determine if a borrower is approved or rejected.
If a borrower fails to repay the instalment within 35 days of it becoming due, we will report the non-payment to the credit reference agency. All bad debt will then be followed by our internal collections team. If you are reimbursed by the provision fund then you do not have to worry about this step since the provision fund has already covered your loss. However, in the event where the provision fund was not able to pay you back for your loss, any funds bad debt collected by the internal collections team is transferred to you.
If a borrower fails to settle their repayment within 35 days of it becoming due, we will report the non-payment to the credit reference agency and aim to reimburse you the principal investment lost from the provisional fund. The reimbursement is subject to the fund availability; therefore, it is not guaranteed. See our terms and conditions for details.
Lending through Fund Ourselves
When lending through Fund Ourselves, you can choose your own return from 5% to 15% per annum. This return is the maximum you can get assuming the investment is continuously lent out with no defaults.
The interest rate you choose will determine the maximum borrower estimated default rate you will be lending to. For example, if you choose 10% return, you will be lending to borrowers with an estimated maximum of 10% chance of defaulting. Meaning you can net 9% of return per annum when taking into account the potential defaults and the provision fund contribution and assuming your funds are continuously lent out over one year. The table below defines our estimated returns for each interest rate requested by our lenders.
We do extensive checks on our borrowers to verify their creditworthiness before issuing any loans. Our checks include credit scoring and affordability checks in addition to background checks like ID, fraud and anti-money laundering (AML). See Borrowers’ Creditworthiness (above) for more details.
The returns presented above are after deducting our fees and before tax assuming continued lending over a 12 month period. Lenders may be liable for income tax on earned interest. To check if you are liable for income tax on your earned interest please check the HMRC website
or seek professional advice.
We are not planning to wind down and not foreseeing any reasons to wind down in the near future. However, if we are to wind down, we have a plan so it can be done smoothly and with the least effect on investments and the performance of live loans.
In the event of a wind down, first we will close the door to all new investments and return all monies waiting to be lent back to lenders. We will also stop all marketing activities and will reduce the team size to what is required to support live loans to manage the repayments as planned and without disruption. The provision fund will continue to support the bad debt during the wind down process as it would normally during normal operations. The provision fund will be the last business unit to wind down once all loan agreements are settled or terminated.
Again, this is our plan just in case we need it.