SECURITY

Mintos Risk Score

As part of our risk assessment, we’re evaluating different aspects of investment opportunities on our platform. To help you make informed decisions about investing in loans, we express our findings with the Mintos Risk Score. The Mintos Risk Score is calculated from 4 subscores that we assign for the company’s loan portfolio performance, the efficiency of loan servicing, buyback strength, and legal setup between the lending company and us.

How the Mintos Risk Score works

All scores and subscores have the same range, but with difference in interpretation.

Before we onboard a lending company, we put it through a series of checks and evaluate investment opportunities and their aspects with the Mintos Risk Score and subscores. We continue monitoring the lending companies and regularly updating subscores and the Mintos Risk Score for the investment opportunities they offer.

Subscores

Subscores grade four aspects of an investment opportunity on Mintos. The Mintos Risk Score is calculated by weighting points from the subscores: 40% loan portfolio performance, 25% loan servicer efficiency, 25% buyback strength, 10% cooperation structure

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SW 10987654321

Mintos Risk Score

The Mintos Risk Score is a numerical measure that portrays the risk level of a particular investment opportunity on our platform. It’s expressed on a scale from 10 (low risk) to 1 (high risk). The calculated numerical value is rounded to the nearest integer.

The score can be withdrawn if one or more of the subscores is not available, and this is expressed with the value “Score Withdrawn” or (SW).

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S D

Statuses

Statuses describe activity of a lending company on Mintos. A lending company with a “live” assigned Mintos Risk Score is considered “Active”.

Status Suspended (S) means that all investment or selling activities related to the loans issued by a specific lending company are stopped on the Mintos Primary and Secondary Markets until new developments with the underlying issues are achieved.

The company can be classified as Defaulted (D) based on the predefined criteria and this means there is no further activity allowed on the Mintos Primary and Secondary Markets for loans issued by that lending company.

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Mintos Risk Score and subscore scale

All scores and subscores have the same range, but with difference in interpretation.

To get the full picture of the risk associated with a specific investment opportunity, check all related subscores.

10

9

8

Low-risk score

Very good performance of all or most of the evaluated aspects of the investment opportunity.

7

6

5

Mid risk score

Good performance for some of the evaluated aspects of the investment opportunity, while some don’t perform as well.

4

3

2

1

High-risk score

Elevated risk in the performance of some or most of the evaluated aspects of the investment opportunity.

Subscores
Loan portfolio performance
The health and performance of the loan book relative to the cost of serving the portfolio.
Loan portfolio quality
Historical and current loan repayment trends
Historical and current loss rates
Issuance volumes
Track record seniority
Product characteristics (e.g. liquidity of the collateral)
Loan servicer efficiency
The capabilities of the loan servicer when it comes to collection of borrowers’ payments.
Financial profile, business procedures, compliance, and quality control
Company’s management and internal risk controls
Loan administration structure and processes
Management of non-performing loans
*
Please note that in some cases, loan servicer and loan originator might be two separate business entities.
Buyback strength
The buyback obligor’s ability to fulfil contractual obligations, meet liquidity needs, and capital sufficiency.
Financial profile, performance, and projections
Management experience
The business regulatory and legal environment
Diversification of revenue streams and geographies
*
Please note that in some cases, buyback obligor and loan originator might be two separate business entities.
Cooperation structure
The legal setup between the lending company and Mintos.
Access to borrower-related cash flows
Recoverability potential based on the legal setup
Transparency of cooperation structure for investors
SW
Score withdrawn (SW)

Score can be withdrawn if:

there’s a lack of information about the specific aspect that’s needed for subscore calculation
there’s a prolonged inactivity of the lending company on the platform (e.g. no active loans for a long time)
if lending company’s status is “Defaulted” or “Suspended”, it’s score is automatically withdrawn
in rare cases when a lending company doesn’t offer a buyback obligation, the “buyback strength” subscore will be marked with SW, but in this case, it will not impact the general Mintos Risk Score.

How often are scores updated?

Mintos Risk Score is updated quarterly, based on the results of monitoring of financials, loan portfolio quality, track records of management, the status of the business environments, etc. Material improvements or deterioration in these factors can result in an immediate upgrade or downgrade of the related subscores and might cause an upgrade or downgrade of the Mintos Risk Score.

What can cause a downgrade?
  • The non-performing loan ratio deteriorates
  • Regulation changes for the worse
  • The company undergoes forced restructuring
  • The company defaults on a financial obligation
What can cause an upgrade?
  • The company significantly improves its debt collection or risk based scoring, resulting in better loan performance and payoffs
  • The company receives a capital injection
  • Regulation improves
  • The company improves its market position, product offering, and income diversification

Under no circumstances should the Mintos Risk Score be treated and relied upon as a credit rating. It is not prepared in accordance with the methodology and provisions defined by the Regulation (EC) No 1060/2009 on credit rating agencies. The Mintos Risk Score is not investment advice and Mintos cannot be held liable for any losses which may result from basing investment decisions on information and/or analytical materials provided on this website.

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