I will look into how the autolending feature works, especially as it pertains to delinquency rates. Because autolending involves software and not just information though, addressing any issues we uncover here will take more time than some of the other questions raised! Just a heads up...
Some of the worst aspects of autolending would take care of themselves if the star rating system were timely and reliable without further programming required. If a lender selects only 5 star partners, they expect a pretty safe loan. They don't expect to lend to partners with outrageous delinquency rates.
Gerard recently told me the rating system was being looked at. As others have pointed out, there needs to be transparency about the factors included and how they are applied to put any faith in the system at all. And as long as current delinquency rates are not included in a timely way it just won't work. Anyone that sees five stars and then looks down and notices a high delinquency rate will realize that the star ratings mean nothing. If they can't reflect the currently known information about the partner, it would be better and less misleading to not have a star rating at all.
The feedback on Asasah is useful. Are there other partners where the star rating has lagged in reflecting Updates on the partner pages? If there are other cases, it'd be great to look into them all at once. Or if it's an isolated incident, that'd be great to know that too.
One example I mentioned to Gerard recently are the Lebanese partners. (And I haven't looked on the partner pages, I pretty much stick to the information in About the Partner on the loan page itself. I doubt that new lenders spend a lot of time researching all the details on the partner pages. I would guess if they notice the star rating they assume it is accurate and useful.)
Al Majmoua today has 4 stars, they have been on the system 32 months with 2.5 million total loans and a delinquency rate of 1.1%. Ameen today has 5 stars, but they have only been on the system 20 months with 1.2 million in total loans and their delinquency rate is 4.9%.
I do not see how a partner with a shorter history of more delinquency can have more stars than a partner with a longer history of much lower delinquency. My only conclusion is that the star ratings are useless at best, and quite possibly misleading.
There was some talk at some point that star ratings did not take into account delinquency because delinquency is calculated different ways by different entities. (Unless I misunderstood the point of the statement.) It seems to me that the only delinquency figure that matters is the one displayed just below the star rating!
However, if the delinquency rate fluctuates daily throughout the month it is not very useful as a risk gauge. There should be a rate calculated in such a way as to smooth out the daily variation. Perhaps just the rate from the last day of each month. And perhaps the monthly rates from the last 12 months to show trends etc. It would not make sense to have daily delinquency adding and subtracting stars all the time, but some reliable measure of recent delinquency should be included if the star rating is to be trusted, I think.
I am very pleased and encouraged by recent developments I've seen. The recently announced change to the popularity sort, Gerard's solicitation of input regarding the star ratings, and your presence here, John! These all seem to bode well for the future!
