I created a machine learning model to better predict which Lending Club loans will be charged off. The model is available on my GitHub.
Check out this video:
In this project, I used deep learning to predict whether or not a borrower will pay off their loan in full. I scraped lending data from Lending Club’s website and used a deep learning model to make my predictions.
I also used Github’s API to collect data on the repositories that contain the code for this project. I analyzed this data to find the most popular repositories and programming languages used in deep learning projects.
The Lending Club Loan Data is an open source dataset that is available on Kaggle. The data consists of features related to loans that were issued by the Lending Club from 2007 to 2015.
In order to prepare the data for modeling, I performed the following steps:
– removed all features with over 50% missing values
– converted string values to numeric values
– one hot encoded categorical variables
– created interaction variables between categorical variables
– split the data into training and testing sets
Before starting to build models, it is important to first understand the data we have. In this section, we will explore the data set provided by Lending Club, including the structure of the data and some of the features.
The data set consists of loans issued by Lending Club from 2007 to 2015. It includes information on each loan, such as the interest rate, loan amount, term, borrower’s credit score, etc. It also includes information on the borrower, such as employment history and income.
There are many features in the data set, and some of them may be more important than others for predicting whether a loan will default. In this section, we will explore some of the features and look for trends.
– Loan Amount: The amount of money borrowed.
– Interest Rate: The interest rate charged on the loan.
– Loan Term: The length of time until the loan must be repaid.
– Credit Score: The borrower’s credit score.
– Employment History: The borrower’s employment history.
– Income: The borrower’s income.
Deep learning is a subset of machine learning that is a neural network. Neural networks are a series of algorithms that seeking to recognize underlying relationships in a set of data through a process that mimics the way the human brain learns.Deep learning is used to classify images, identify objects, cluster groups of similar objects, and even to make predictions. In this project I have used deep learning algorithms to create a model that will predict whether or not a borrower will pay off their loan.
I have used LendingClub loan data from 2007-2010 and tried different deep learning models. The best model I found was with 3 hidden layers and each layer had 100 nodes. I used the relu activation function for the hidden layers and sigmoid for the output layer. I trained the model with 70% of the data and tested it with the remaining 30%. The accuracy of this model was 93%.
In this section, we will go over the results of our deep learning model on the Lending Club loan data set. We will discuss how the model performed and what factors seem to be the most important in determining loan default.
In this project, we used deep learning to predict loan default risk on Lending Club loan data. We found that our deep learning model outperformed the baseline logistic regression model, and that the best model had an accuracy of 82% on the validation set. Additionally, we found that our model was able to correctly identify high-risk loans with a precision of 86%. This suggest that our model could be used by Lending Club to screen loans and improve their approval process.
There are many directions that this work could be extended. One obvious direction is to use a more sophisticated deep learning model such as a recurrent neural network or a convolutional neural network. Another direction is to use a more sophisticated feature engineering approach such as incorporating time series features or text features from the loan descriptions. Finally, it would be interesting to analyze the effect of different data pre-processing techniques on the performance of the deep learning models.
We would like to express our gratitude to Lending Club for making their loan data available, and to all the individuals who have contributed to this project on GitHub.
 Lending Club Loan Data, https://www.lendingclub.com/info/download-data.action
 Loan Data Dictionary, https://resources.lendingclub.com/LCDataDictionary.xlsx
 Neural Network Introduction (Chapter 4), Deep Learning 101 by Yoshua Bengio (2015)
 Building a simple neural network from scratch in Python, https://towardsdatascience.com/building-a-simple-neural-network-from-scratch-in-python-4c601dda63ca
 Deep Learning 101 – First Neural Network, https://medium.com/@hangtwenty/deep-learning-101-first-neural-network-6be9a28a1b53
This repository contains the code for my blog post “Lending Club Loan Data Analysis with Deep Learning”. In the post, I use a deep learning model to predict whether or not a borrower will default on a loan from Lending Club. The data used in the analysis can be found in the data/ directory.
The code is provided “as is” and without warranty. Please see the LICENSE file for more information.
Keyword: Lending Club Loan Data Analysis with Deep Learning on Github