LendingClub CEO Scott Sanborn Talks Credit & Holiday Spending

Summary

Podcast Summary:
Bloomberg Talks — LendingClub CEO Scott Sanborn Talks Credit & Holiday Spending
Date: December 3, 2025

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Episode Overview

This episode features an in-depth conversation between Bloomberg hosts and Scott Sanborn, CEO of LendingClub, with critical analysis from Herman Chan, Bloomberg Intelligence senior analyst for U.S. regional banks. The discussion centers on LendingClub’s recent performance, credit market dynamics, the profile of today’s American credit user, and the company’s product innovation in lending—especially around debt consolidation and home improvement use cases. The episode aims to uncover how LendingClub navigates economic shifts and maintains credit quality, while exploring broader trends in consumer credit behavior during the holiday season.

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Key Discussion Points & Insights

1. LendingClub’s Customer Base and Business Scope

[01:43–02:45]

• Target Market: The “middle majority” Americans—consumers with higher incomes ($80,000–$200,000, average ~$125,000) who are heavy users of credit, not the wealthiest, nor underserved populations.
  • Scott Sanborn: “It represents about a third of the US population, but it’s close to half of the credit wallet.” [01:55]
• Credit Use Dynamics: These customers can afford major life expenses but require credit to manage them (cars, college, etc.), and often juggle multiple forms of debt, mostly excluding mortgages.

2. Marketplace Model and Credit Performance

[03:08–04:27]

• Marketplace Evolution: LendingClub began as a pure marketplace, selling all originated loans, then evolved post-bank acquisition (2021) to retain loans on their balance sheet—enabling more control, innovation, and resilience.
  • Scott Sanborn: “We’re the largest eater of our own cooking. We’re the largest holder of LendingClub loans.” [03:30]
• Testing & Innovation: Retaining loans lets LendingClub pilot new products or risk models internally before offering them to marketplace buyers, leading to “lower delinquencies... lower roll rates, higher recovery rates, lower prepayments, lower fraud... literally every aspect... we’re outperforming.” [04:07]
• Credit Consistency: Results have “remained consistent” due to proactive adjustments, including “more than 200 tests in the market” at any time for pricing and underwriting refinements. [04:39]

3. Selective Lending and Debt Consolidation Strategy

[05:13–07:02]

• Stringent Selection: LendingClub is “very picky” about borrowers. The platform is designed to identify and nurture desirable customers, especially those seeking to refinance high-interest credit card debt.
  • Scott Sanborn: “Our largest use cases [are] for people who already have... credit card debt... we say, great, you should do this instead.” [06:11]
• Debt Payoff Assurance: LendingClub directly pays off customers’ credit cards, ensuring loan proceeds go to debt reduction, not discretionary spending.
• User Benefit: This process typically saves borrowers significant interest (up to 700 basis points) and boosts their FICO scores by 30–35 points. [06:35]

4. Why Are Credit Card Rates So High?

[07:05–08:32]

• Consumer Behavior: Most credit card holders choose cards for rewards, not rates—many “don’t even know what the interest rate is.” Half don't carry balances (they pay off monthly, collecting rewards); the rest bear the burden of high interest.
  • Scott Sanborn: “The research we’ve done is half of all customers say they don’t know the interest rate on their credit cards. And the half that say they do, more than half of them are wrong.” [08:14]
• Regulation Impact: The CARD Act limited arbitrary rate hikes, leading issuers to set higher baseline rates. Those carrying a balance effectively subsidize rewards for transactors.

5. Scaling Up: New Product Lines and Market Expansion

[09:00–11:32]

• Growth Ambitions: LendingClub aims to double originations to $18–20 billion/year. The main lever remains refinancing credit card debt—a $1.3 trillion market—with additional growth from major purchase financings (medical, education, home improvement).
• Home Improvement Lending: The company’s next adjacency is unsecured home improvement loans, leveraging their acquisition-driven capability to disperse funds in tranches directly to suppliers/contractors.
  • Scott Sanborn: “People... are staying in their homes longer... The homes need to be invested in, they need to be improved.” [11:04]

6. State of the Consumer

[11:32–12:01]

• Resilience: The typical LendingClub borrower remains “remarkably resilient” despite broader economic uncertainty, though “the sentiment isn’t great.” [11:35, 11:47]
• Host Take: The hosts recognize LendingClub’s “great vantage and view into what’s going on in the economy.” [11:51]

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Notable Quotes & Memorable Moments

• “We’re the largest eater of our own cooking.”
  – Scott Sanborn, on retaining and testing loans internally [03:30]

• “Our largest use cases for people who already have debt, credit card debt most notably, which at this point, more than half of all Americans are carrying... 23% interest rate. It’s high. Highest they’ve ever been in history.”
  – Scott Sanborn [06:01]

• “The research we’ve done is half of all customers say they don’t know the interest rate on their credit cards. And the half that say they do, more than half of them are wrong.”
  – Scott Sanborn [08:14]

• “Consumer we serve is demonstrating themselves to be remarkably resilient despite... the sentiment isn’t great.”
  – Scott Sanborn [11:35, 11:47]

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Timestamps for Key Segments

• Introduction & Company Overview: 00:29–02:45
• Marketplace Model & Credit Outperformance: 03:08–04:27
• Real-Time Credit Data & Active Testing: 04:27–05:17
• Selecting Borrowers & Debt Consolidation: 05:13–07:02
• Why Credit Card Rates Are High: 07:05–08:32
• Growth Targets & Product Expansion: 09:00–11:32
• The State of the Consumer: 11:32–12:01

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Summary Flow & Context

The episode delivers a pragmatic, data-driven, and at times conversational look at the evolution of credit, how LendingClub’s unique approach delivers value (for both the business and its customers), and the company’s roadmap for growth. CEO Scott Sanborn candidly addresses the credit ecosystem’s challenges (especially for borrowers), demystifies credit card interest rates, and explains LendingClub’s dual track of vigilance and innovation. The tenor throughout is both analytical and accessible—grounded in real consumer habits and marketplace realities.

Transcript

[Indiana University Narrator]

Old playbooks won't solve tomorrow's problems. Indiana University is proving how higher education can create solutions with industry. Our partnerships address future talent and workforce needs, support entrepreneurs and local businesses, and create solutions that turn discoveries into dollars. Together, we're building a model for industry partnerships that fuel economic growth. Explore IU's impact at iu.edu impact.

[Bloomberg Host]

Bloomberg Audio Studios Podcasts, Radio News we promised you that we were going to continue on the US Economy and really the US Consumer, the online lending marketplace and platform for loans, credit cards, deposit accounts, insurance and more. We're talking about Lending Club. They announced $100 million share buyback just about one month ago. It was about 50, not 50, nearly 5% of the company's market value on the day of the announcement. Now, Atlas have been raising their price targets on the stock this year, most recently again raising them since the company reported earnings late October. The company posted third quarter results that beat estimates. They provided a guidance range for new fourth quarter originations with a midpoint above estimates. And the stock, it's actually up this year?

[Bloomberg Interviewer]

Yeah, it is. Shares of the $2.1 billion market cap company about 14%, up more than 12% since reporting those earnings back on October 22nd. Delighted to have with us Scott Sanborn, CEO of lending club, also CEO for close to a decade at lending club for 15 years now. Also with us here in the Bloomberg Businessweek studio, Herman Chan, a Bloomberg Intelligence senior analyst for U.S. regional banks. He helped bring all of this together. Scott, I want to start with you and just give us some size and scope of the business, the consumers that you're working with, who's interacting with the platform.

[Scott Sanborn]

Yeah, so we serve a customer base we call the middle majority. They are, if you think about credit, which we are a credit centric bank. If you've got a lot of money, you don't need a lot of access to credit. You pay cash for car, you save up to send your kids to college. If you're on the other end of the spectrum, you can't really access credit. So there's this middle group that are high income, heavy users of credit. So they can afford a car, they can afford to send their kids to school, but they need to use credit to do it. That's who we serve. It's a really big customer base. It represents about a third of the US Population, but it's close to half of the credit wallet. So they are more, more likely than average to have every form of credit. And that credit is, with the exception of mortgages, also larger Than average. That's who we serve.

[Bloomberg Host]

How much do these people usually make our average?

[Scott Sanborn]

And you know, obviously misleading. Average is going to be misleading, but average is about $125,000. But you can think of it of ranging between, call it $80,000 in individual income to about 200,000 is where we really over index.

[FedEx Sponsor Voice]

Great.

[Bloomberg Analyst]

One of the real highlights of your recent investor day last week, last month was the panel discussion with marketplace investors. And we talked about this earlier, before, before your appearance here on radio when the panelists talked about being aligning performance expectations, partnering with better operators. Are you seeing that with the private, private credit space?

[Scott Sanborn]

Yeah, we do. So you know, we were born as a marketplace. Initially, everything we originated, we sold. When we acquired the bank in 21, we started to hold a portion of our loans on our balance sheet that both gives us a stronger and more resilient earnings profile, also allows us to do other things, innovate using our balance sheet. And what we found is just by aligning our interest with our loan buyers. We're the largest eater of our own cooking. We're the largest holder of lending club loans. We care very deeply about the performance of the credit. And you know, credit is always evolving. It's very dynamic because we have a balance sheet. What we can do is when we want to test something new, we test it on our balance sheet. Let's try longer duration, let's try a larger loan size, let's try a new marketing channel. We hold that first. You own it, we own it. We make sure it performs the way we expect and then we release that to the marketplace. If you don't have a balance sheet, you can't really do that. And so that's visible in our results across every aspect of underwriting. So lower delinquencies than the rest of the industry, 30 or 40% below, lower roll rates, higher recovery rates, lower prepayments, lower fraud. Literally every aspect that you can measure of credit we're outperforming on.

[Bloomberg Interviewer]

Has that remained consistent this year, in recent months, in recent weeks? Like you have a great real time view of the consumer in the form of how well they are doing in terms of paying back their loans.

[Scott Sanborn]

That's right.

[Bloomberg Interviewer]

Still looking good.

[Scott Sanborn]

Yeah. So that's been consistent for, you know, we release four years of data we put out there. And so it's remain consistent but you know, it's not. It's kind of like a duck on a pond. It's remained consistent because we're doing a lot of work underneath the COVID So you Know, something that we shared in Investor day is at any given time, we have more than 200 tests in the market where we're evaluating price points, changes to their credit. So we're constantly adjusting to reflect what's happening with the consumer, and that's what's giving us the consistent results.

[Bloomberg Host]

Well, so that, to me, says you're very picky about who you lend to.

[Scott Sanborn]

That's true. We are.

[Bloomberg Host]

So in terms of your tasks, so tell me what it is. I mean, and how many of people who apply or want to access your platform, you're like, I'm out.

[Scott Sanborn]

Yeah. So we're pretty good at selecting who we want to have in our portfolio and reaching out to those people and then both delivering the price and product experience, but also, let's call it the user experience that gets them all the way through. So we look for areas where, for example, we can control the use of the fund proceeds. If you come to me and say, I want $20,000 because I'm going to do whatever my, my kid needs braces, or I'm moving cross country.

Great. But unless I'm paying the orthodontist, I don't actually know that that's what you're using it for. So we try to set ourselves up so that we are in some ways controlling the use of proceeds and then making the experience such that it makes it really easy. So our largest use cases for people who already have debt, credit card debt, most notably, which at this point, more than half of all Americans are carrying, they're carrying it at really high rates. 23% interest rate. It's high. Highest they've ever been in history. And we say, great, you should do this instead, it takes less than five minutes. We're going to save you 700 basis points. Oh, and by the way, check all the credit cards that you have that you want us to pay off. Like we see you have Chase or cap one. Great. Check those. And we're going to pay them directly. So we know you are paying off your credit card debt. You're not just saying you're going to pay off your credit card debt and taking out more money. We are paying it off for you. Benefit for you is, you know, you've consolidated everything into one bill. Other benefit is your FICO score usually goes up by 30, 35 points.

[Bloomberg Host]

Right.

[Scott Sanborn]

Because you've lowered, you know, your, your utilization.

[Bloomberg Host]

How much can you lower? Like, I got to tell you, credit card rates just blow my mind about how high they are. And I'm just curious, why are they so high. Are people so bad? Is it to cover?

[Indiana University Narrator]

No.

[Bloomberg Host]

I'm curious.

[Scott Sanborn]

Yeah, no, it's a great question.

[Bloomberg Host]

It just seems like it's out of control and I think it prevents people from becoming financially solvent or creating, you know, kind of getting ahead of the game, if you will.

[Scott Sanborn]

Yeah, there's a lot to unpack in that.

[FedEx Sponsor Voice]

Sorry.

[Scott Sanborn]

It is. No, no, it's a great question and you know, there's a number of questions underneath. But I'd say the, the biggest thing is.

If you think about how people choose credit cards, it is not based on the interest rate. Yeah, right. It's my Sky Miles card or my, whatever, my retail store card. I'm going to get rewards for this. They don't even know what the interest rate is or it's a promotional rate that resets. So that's one they don't choose based on that. Half of the people don't revolve on the card. They're collecting these rewards. Yeah, but they're not carrying a balance. Well, guess, guess who's paying for that? All the people that are carrying a balance. Those people don't know what their rates are. The research we've done is half of all customers don't say they don't know the interest rate on their credit cards. And the half that say they do, more than half of them are wrong.

[Bloomberg Interviewer]

Right.

[Scott Sanborn]

They think they know the rate, but they don't.

[Bloomberg Host]

Right.

[Scott Sanborn]

And so cards have been able. And one of the big resets with the cards was, was driven by the Card act, which limited how much cards could increase rates so they factored in higher rates.

[Bloomberg Interviewer]

I just want to jump in real quick. We are speaking with Scott Sanborn, CEO of Lending Club. He's been CEO for close to a decade. We're also just getting some breaking news too on Apple. Apple's design executive Alan Dai poached by Metta in a major coup. This is the most prominent design executive executive at Apple. This underscores a push by the social networking giant into AI equipped consumer devices. We also have here with us Herman Chan. He's Bloomberg Intelligence senior analyst for U.S. regional banks.

[Bloomberg Analyst]

Thanks. Wanted to follow up with you Scott on some of the medium term expectations you laid out in Investor Day. You talked about doubling loan originations. We're talking about 18 to 20 billion dollars a year.

What are some of the levers to get you to that level? You mentioned use cases. Maybe talk about home improvement as a use case and how do you maintain solid credit quality as you ramp up that.

[Bloomberg Host]

And home improvement is Something you're getting into, right?

[Scott Sanborn]

That's right, yep. So first and foremost is, as I mentioned, you know, credit card refining. People out of their credit card debt into a fixed rate, lower rate loan is number one use case. It's about 80, 80% of what we do. That market is the largest it's ever been. There's 1.3 trillion.

[Bloomberg Host]

80% of what you do is that.

[FedEx Sponsor Voice]

Wow.

[Bloomberg Host]

Go ahead, sorry.

[Scott Sanborn]

So that is, you know, 1.3 trillion in balances priced at really, really high rates. We, you know, when the rate environment shifted and the inflationary pressure shifted, we pulled back on a lot of our marketing. So we're currently running today at sort of below our historical volumes. So we're just going back into that market, turning back on marketing channels that we had turned off and then the other areas. Personal loans can be used literally for anything. Right. And before credit cards came around and came to be, they were the dominant way consumers accessed credit for everyday needs. So we have a major purchase finance business that's growing today. Call it 50 plus percent year on year. That's allowing things like elective medical procedures, you know, Lasix braces for your kid, you know, all kinds of procedures, fertility treatments, teeth implants. So things that insurance doesn't pay for, but you want to do and you want to do right away. Private school education, that's another one. So home improvement is sort of a next adjacency. People right now are staying in their homes longer. You know, 75% of Americans, their mortgage rate is under 5%. They're not going anywhere.

[Bloomberg Host]

Right.

[Scott Sanborn]

And the homes are getting older. So the homes need to be invested in, they need to be improved. So effectively enabling home improvement through an unsecured loan where again, we are controlling the use of proceeds. We can pay the supplier, we can pay the contractor. We've got the capability through an acquisition we announced to, you know, disperse this in phases to multiple parties. So we're, we're really excited to kick that off.

[Bloomberg Host]

We've only got like 30 seconds left here.

[Scott Sanborn]

Consumer doing okay, I'd say the consumer we serve is demonstrating themselves to be remarkably resilient despite.

[Bloomberg Host]

I hear that a lot. It's a drinking game now, but we'll.

[Scott Sanborn]

Acknowledge the sentiment isn't great.

[Bloomberg Host]

Yeah, come back soon. I have to tell you that I think we're all like, I want to go, I want to go. Please come back late because I think you have a great vantage and view into what's going on in the economy.

[Scott Sanborn]

We'd love to.

[Bloomberg Host]

Okay, we would too Scott Sanborn, Chief Executive Officer of Lending Club Our amazing Herman Chan, Bloomberg Intelligence senior analyst for.

[Indiana University Narrator]

U.S. regional banks old playbooks Won't Solve tomorrow's problems Indiana University is redefining the relationship between higher education and industry. We're addressing future talent and workforce needs through more than 10,000 industry partnerships, supporting and investing in young entrepreneurs and businesses that create jobs and grow the economy, and facilitating the research and development that lead to breakthrough solutions. This isn't business as usual. Indiana University + Industry is a partnership that fuels economic growth. Explore IU's impact at IU. Edu impact.

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