LendingClub's Tips for a Financially Healthier 2021

Rhea-AI Summary

LendingClub Corporation (NYSE: LC) shared essential tips for achieving financial health in 2021, emphasizing the need to break old financial habits post-pandemic. Key recommendations include evaluating spending habits, creating a monthly budget, establishing savings, reducing debt, borrowing responsibly, and investing in the future. Anuj Nayar, LendingClub's Financial Health Officer, highlighted the ongoing financial struggles of many Americans, worsened by COVID-19, and the importance of proactive financial management. The company's focus remains on improving borrower financial health through innovative solutions like the balance transfer loan.

Positive

• Launch of the balance transfer loan enables borrowers to manage credit card debt effectively.
• Nearly half of borrowers using balance transfer loans reported improved FICO scores and reduced revolving balances.
• Commitment to help customers navigate financial challenges, especially amid the pandemic.

Negative

• 67% of Americans are not considered financially healthy, indicating a significant risk for lending operations.
• Overall personal debt remains high at an average of $90,460 per American, which may impact loan repayment rates.

SAN FRANCISCO, Dec. 28, 2020 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), America's leading online lending marketplace connecting borrowers and investors, released tips for staying financially healthier in 2021.

Eleven years after the Great Recession technically ended, many Americans are still struggling financially and the COVID-19 pandemic has only made things worse. According to the Financial Health Network, in 2020, the majority of people in America (67 percent) are not considered financially healthy¹. With little financial cushion, many Americans are struggling to build savings and plan for their futures.

"As a vaccination program starts to roll out across the country, we should get closer to our pre-pandemic lives in 2021 but that doesn't mean we should get back to old financial habits," said Anuj Nayar, Financial Health Officer at LendingClub. "Many Americans have seen reductions in income and are saddled with unforeseen expenses as a result of this pandemic. It's time to get back to basics so we can emerge from this crisis financially stronger."

LendingClub is committed to helping borrowers improve their financial health, especially during the COVID-19 pandemic. For a financially healthier 2021, Anuj Nayar recommends to:

• Take stock of your financial life. Look at your spending habits and identify if you are living within your means. A critical part of financial planning is identifying if you are spending less than you are making. It's also important to make sure you're paying off bills on time and in full. If you are doing this already, you're on the right track to a healthier future.
• Create a budget every month and stick to it. Budgets can be simple to reflect short term goals or more advanced to project over a longer period of time. The important thing is to identify how much you're spending on basic needs (like food, shelter, clothes), discretionary categories (like dining out and shopping) and how much you're stashing aside for savings every month. Plus, a budget will help you from impulse spending that could get you into a debt trap.
• Identify ways to save. It's important to have sufficient living expenses in savings that you can draw from in case of an emergency and have sufficient long-term savings that you do not touch. If you haven't started a habit of saving, set up an automatic disbursement so that part of your paycheck every month goes automatically into savings. If the money is out of sight, you might be less tempted to spend it.
• Decrease your overall debt load. In 2019, Americans carried an average personal debt of $90,460² and, while overall credit card debt has dropped in 2020, many people are still unable to pay their bills in full. To decrease your overall debt load, consider consolidating your debt or refinancing it through a lower cost personal loan to pay it off responsibly.
• Borrow responsibly. It's important to make sure you don't over-lever yourself. While credit cards are great for convenience, they're a horrible way to borrow money. Credit cards are basically a high-interest loan that can become challenging to pay back. This can lead to a decline in credit scores and in some cases a revolving debt trap. Only swipe if you intend to pay that purchase back in full when your bill arrives.
• Plan and invest in your future. If you're at the stage where you've managed the above, start investing in yourself and your future. Consider working with a financial advisor to understand your investment options, identify any life insurance needs and start estate planning.

LendingClub is on a mission to help customers on a path towards financial success and it frequently monitors the impact of its products on financial health of borrowers. For example, last year, the company launched balance transfer loan to give borrowers the ability to seamlessly pay credit cards and high-interest debt as part of the personal loan process. LendingClub works with a partner network of more than 1,700 credit card, bank and loan companies. With a balance transfer loan, members can add up to 12 creditors per loan and are able to begin improving their financial health immediately—from the time of their application. After working with LendingClub, nearly half of balance transfer borrowers saw higher FICO and lower revolving balances.

Additionally, in an effort to further engage members along their financial health journey, LendingClub launched Credit Profile within its Member Center this year. With Credit Profile, borrowers gain clarity and insight to help them manage their immediate financial needs today while improving their credit for a better tomorrow. Credit Profile uses data to provide members with a guided experience of their financial lives, highlighting important credit decisioning and pricing factors like debt-to-income ratio, credit utilization and credit score.

Since LendingClub's launch in 2007, it has facilitated over $60 billion in loans to more than 3 million members. Loans facilitated by LendingClub typically save borrowers money versus higher APR credit card debt with many borrowers seeing lasting improvements in FICO 12 months into the life cycle of the loan. Within the same 12-month timeframe, nearly half of LendingClub debt consolidation borrowers have lower revolving balances. For more tips, visit LendingClub's blog.

About LendingClub

LendingClub was founded to transform the banking system to make credit more affordable and investing more rewarding. Today, LendingClub's online credit marketplace connects borrowers and investors to deliver more efficient and affordable access to credit. Through its technology platform, LendingClub is able to create cost efficiencies and passes those savings onto borrowers in the form of lower rates and to investors in the form of risk-adjusted returns. LendingClub is based in San Francisco, California. All loans are made by federally regulated issuing bank partners. More information is available at https://www.lendingclub.com.

¹ "U.S. Financial Health Pulse 2020 Trends Report," Financial Health Network, August 2020 
² "Debt Reaches New Highs in 2019, but Credit Scores Stay Strong," Experian Consumer Debt Study, March 9, 2020 

CONTACT:

For Investors:
IR@lendingclub.com

Media Contact:
Press@lendingclub.com

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SOURCE LendingClub Corporation

FAQ

What are LendingClub's tips for financial health in 2021?

LendingClub advises evaluating spending habits, creating a budget, establishing savings, reducing debt, borrowing responsibly, and investing in future financial security.

How does LendingClub support borrowers during financial struggles?

LendingClub launched initiatives like the balance transfer loan to help borrowers manage high-interest debt and improve their financial health.

What percentage of Americans are financially healthy according to LendingClub?

LendingClub reports that 67% of Americans are not considered financially healthy.

What is the average personal debt carried by Americans?

The average personal debt carried by Americans was $90,460 in 2019.

How can borrowers improve their credit scores with LendingClub?

Many LendingClub borrowers utilizing balance transfer loans saw improvements in their FICO scores and lower revolving balances.