They're actually trying to give you the lowest rate they can while staying profitable, you know, to be competitive with other lenders. There's no baseline, all

They're actually trying to give you the lowest rate they can while staying profitable, you know, to be competitive with other lenders. There's no baseline, all our characteristics are inputs to a function that estimates risk of default. Then the lender chooses what rate to offer based on their portfolio design. In one sense, it's a zero-sum game. If person A is a better debtor, A gets a better rate than B. However, a more sophisticated portfolio will try to find anti-correlated debtors. Rather than lending to 100 low-risk people all similar to each other, I'd rather diversify and include some very different people that may be higher risk on an individual basis; the aggregate risk can be much lower than individual. To that end, the more the lender can learn about me, the more chance I have to reveal how anti-correlated I am with others.