Bitcoin peer-to-peer lending network BTCJam has implemented a risk-based pricing model, changing the way it sets borrowing interest rates in an attempt to improve users’ security.
The model, widely used by lenders in the mortgage and financial services industries, sets the borrower’s interest rate based upon their credit score; the higher the credit score, the lower the interest rate.
A statement from the lending network, said:
“Since BTCJam has all of the information about the borrowers, we are in a better position to determine the likelihood of the borrower paying back the loan and will adjust the interest rate accordingly.”
“We are confident that this change will improve BTCJam and allow us to continue to maintain the highest repayment rates in peer-to-peer lending, as well as increase overall returns to investors,” the statement concluded.
The new model means interest rates for all loans will be standardised, ensuring that investors are able to offset possible loans from defaults.
Loans created prior to the adoption of the risk-based pricing model will continue until they have either been funded or have expired.
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