Category Archives: Tips

Lending Club statistical significance for loan categories

I’ve been investing with Lending Club lately. Lending Club is a form of P2P lending. In short, you’re lending more directly to the borrowers requesting loans. Since there’s less overhead, the investor gets a higher interest rate (with some increased risk) and the borrower gets a lower interest rate on his/her loan.

I’ve spent a lot of time going over the data provided by Lending Club. I’m fascinated to see what kinds of interesting information I can get out of the raw data. For example, there is a more than 95% probability that a loan that has repaid more than 65% of it’s principal will repay fully. In other words, you really don’t have to worry nearly as much once the loan is past 65% repayment.

Tonight I wanted to find out what loan information was statistically significant in regards to whether or not the loan would default. See below for the results, and keep reading if you’re interested in the technical details:

Data Statistically significant in regards to repayment? Confidence
Inquiries in the past 6 months YES >99.99%
Sate borrower lives in YES >99.99%
Credit Grade (A1, A2, etc) YES >99.99%
Loan Length NO N/A
Loan Purpose YES >99.99%
Home Ownership (Own, Rent, Mortgage) YES >99%
FICO Score YES >99.99%
Open Credit Lines NO N/A
Employment Length NO N/A

All of these are pretty much what I’d expect with the exception of the last two. I was avoiding borrowers with a lot of open credit lines or who hadn’t been employed very long. It’s good to see that this prejudice was unjustified.

Confidence factor can be a little confusing. For example, the confidence factor for “Loan Purpose” means that there is less than 0.01% chance that the differences between the observed and expected values of loan repayment for the loan purpose were caused by random chance. That’s why we are more than 99.99% confident that there must be some underlying reason other than chance that the data differed. This does not include any notion of how or why the loan purpose matters to loan repayment, only that it does.

These values were calculated using a Chi-square test. I took all the loans that were either fully paid, defaulted, or charged off. I further broke the loans down into two results: loss, which included all loans that had repaid less than 94% of the loan’s principal, and gain, which included all loans with more than 94% repayment of principal.

I only took categories that had more than 300 loans in the set. With smaller numbers you risk having your results greatly impacted by random chance. For example, only seven of the thirty-five credit grades met this criteria (A4, A5, B2, B3, B4, B5, and C1) and only four states (CA, FL, NY, and TX). Since we’re only interested in knowing whether different credit grades or states impact the likelihood of repayment, this restriction is fine.

If you’d like to see the expected vs observed tables for these results, you can grab here: Observed vs Expected Tables.

Hopefully I’ll find time to talk about future findings!

Howto: Install Boot Camp 2.1 drivers on a new MacBook Pro using a Leopard install DVD

So you’re in Korea and you stupidly forgot your MacBook Pro install DVD that you need in order to install Boot Camp drivers, huh? Have no fear, as long as you can borrow a Leopard install DVD off someone, it’s possible to get everything working. The problem here is that even with the Leopard install DVD (at least in my case), the DVD has the Boot Camp 2.0 drivers which will give you a blue screen of death if you try to install it on the latest MacBook Pro revision.

Step 1: Copy the Boot Camp driver install files from the Leopard CD to your Boot Camp desktop.

Step 2: Find the Broadcom/wireless driver installer and delete it.

Step 3: Install the 2.0 firmware through Drivers\Apple\BootCamp.msi. It will automagically pass through the wireless driver installation with no BSoD. You’ll need to reboot after this install

Step 4: Now run the 2.1 update, found here: Reboot.

Step 5: Enjoy!

10 days in linux

I’m finally able to use Kubuntu for an extended time! I told myself that I’d stay for as long as I could if linux started supporting my dual screen display (I spent hours previously with little to no luck on getting dual screen to work) and supported GMod above 800×600 resolution. It now does both! I have now used Kubuntu without booting into Windows once for 10 days. In order to share my joy with whoever may read this blog entry, I’ll share some tips I learned along my travels. 🙂

  1. Always use envy to install your drivers. For whatever reason, the default restricted installer doesn’t install a very good driver.
  2. Use “sudo apt-get build-dep wine” to get the dependencies for building wine. I like to compile wine from scratch, so this has come in handy.
  3. Use “uname -a” to get your current kernel version
  4. Did you display configuration go bonkers and now you can’t do anything? Use “dpkg-reconfigure -phigh xserver-xorg” to reset the config.
  5. Do you get a black screen on startup? Install package “startupmanager”, run it under sudo, change the resolution to something lower. You probably also want to enable text display in there,  comes in handy.

Last, not included on the list because it’s pretty random, you can output to sound using /dev/dsp. Ex, file > /dev/dsp will “play” a file through your soundcard. Pointless but cool.