Bondora assigns a credit rating to every loan issued. This indicates how likely the borrower will default on their payments for that specific loan. In other words, the Bondora Rating is intended to give you a simple indication of how likely it is that a borrower will not pay back the principal and interest when it’s due.
The rating has eight levels ranging from "AA", which indicates a lower likelihood of payment default and are therefore the loans with the lowest risk, to "HR", which is the highest risk. HR loans are expected to have the highest risk of default.
The Bondora rating is calculated from our own proprietary system using hundreds of different data points, with traditional sources, such as credit reference agencies, population registries, and employment records, as well as non-traditional data, like social media, national identity card data, how borrowers interact with our website and hundreds of more data points.
Since a rating is recalculated for each new loan, including for the same borrower, it is possible for the same borrower to have multiple loans with different ratings and interest rates at a time. Due to growing confidence in the assessment of the borrower, their interest rate on future loans with Bondora might be lower and with a better rating if they have paid their obligations in time. However, this is not always the case.
Our blog is an excellent source of information and analytics, which dives into all the different statistics every month. You can use this to help give you an idea of what ratings are most appropriate for your strategy. Make sure you follow our blog for all those regular updates.
Watch this video if you get F and HR ratings that you haven’t selected: