Why do we score lending companies and not loans or notes?

In today's market, the vast majority of consumer loans and notes come with a buyback obligation offered by a lending company.

This means that any late or defaulted loan or note will be fully paid (principal + the interest) by the lending company providing the buyback obligation. 

Since long delays and defaults are common in consumer lending, buyback obligation is triggered very frequently.

As there is always a lending company behind a certain loan, you should not worry about the performance of individual consumer loans. 

Therefore, at the end of the day, the only thing you should assess is the ability of the lending company to cover the buyback obligation and its liabilities to investors.

How do we do that? Learn here.

Importantly, the buyback obligation does not apply to real estate, agriculture, and SME lending. It is only applicable to certain platforms offering consumer loans originated by lending companies. 

See a list of them here.