Goldman Using Subprime Borrowing to Understand Credit Cycle

In early 2018 we learned that more than 80% of borrowers taking up loans with Goldman Sachs’ Marcus had FICO scores of more than 660; this meant that around 20% of borrowers were below that mark; an analyst recently wrote in a report that management “noted that it originates a low single digit % of customers in the 630-660 FICO bucket as it believes these credits are a good barometer for evaluating turns in the credit cycle”; analyst Matt O’Connor also noted that Marcus is on its eighth iteration of their credit model and that they are highly reliant on “ability to repay” as a key input. Source

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