Doesn’t the lower credit scores make the loans extremely risky?
Not necessarily. Low credit scores reflect a history of the borrower s credit and describe past financial problems experienced by the borrower. The best predictor of future performance is past performance. Although the loans made by DLG provide an investment that is considered riskier than CD s or annuities, the higher return is intended to compensate for the additional risk. DLG s business is to evaluate loans and try to minimize investor risk. .
