Why vetting matters

Peer-to-peer (P2P) lending platforms act as matchmakers between individual investors and borrowers. Unlike banks that underwrite and hold loans on their balance sheets, many P2P platforms facilitate lending while investors assume credit risk. That arrangement makes accurate borrower screening essential: platforms need to protect lenders from excessive defaults while keeping access to credit efficient for qualified borrowers.

Platforms that screen well reduce investor losses, preserve marketplace liquidity, and help borrowers get fair pricing. Weak vetting can result in higher default rates, more aggressive collection practices, and ultimately fewer investors willing to fund loans — which reduces consumer access to affordable credit.

How platforms actually evaluate you (step-by-step)

Below are the typical steps P2P platforms use when assessing an individual applying for a personal loan. Not every platform follows every step, and some add proprietary checks or third‑party partners, but these are the core actions.

1) Identity, fraud and KYC checks

Before any credit decision, platforms verify identity elements (name, SSN, date of birth) and run know‑your‑customer (KYC) and anti‑money‑laundering (AML) screens. These checks reduce fraud and comply with federal rules (e.g., Bank Secrecy Act requirements when platforms act like loan servicers) and state licensing. Platforms may also check public records for bankruptcies or liens.

Sources: CFPB, industry terms of service for major marketplaces (e.g., LendingClub, Prosper).

2) Credit report and score review

Most P2P sites pull one or more credit bureau reports and use common scoring models (FICO, VantageScore) or their own scoring logic. Credit score bands heavily influence whether you qualify and what interest range you’ll be offered. Many marketplaces publish typical minimums, but underwriting also considers the full credit file — delinquencies, collections, credit utilization, and length of credit history.

Example: Applicants with higher scores typically receive better loan grades and lower APRs; applicants with thin credit files may be considered using alternative data (see below).

3) Income verification and ability to repay

Platforms generally confirm income and employment to satisfy investor concerns about repayment. Typical methods include:

  • Uploading pay stubs, W‑2s, or tax returns.
  • Direct verification services (payroll APIs) that connect to employers or bank accounts.
  • Bank‑transaction analysis to confirm deposits and spending patterns.

For freelancers and gig workers, some platforms accept two‑years’ tax returns or use bank account inflows instead of conventional pay stubs. See our guide on [income verification for freelancers](