Various forms of crowdfunding, intermediated by peer-to-peer lenders, also claim superior credit evaluation. Of course, much of the hoopla surrounding these new forms of lending has yet to be tested by a serious downturn, and it is unclear how responsibilities for recovery will devolve between intermediary and investor at such times.
Nevertheless, in this Information Age, not only are there more data with which to determine a loan applicant’s creditworthiness, it is also possible to track their behavior for early warning signs of stress. Furthermore, in this interconnected world, a borrower’s inability to hide adverse information such as default when tagged by a unique ID constitutes a big incentive to repay.