From Credit Crisis to Controlled Growth
Steering a Mid-Prime Lender Through a Credit Storm
In early 2023, a mid-prime personal loan provider specializing in debt consolidation found itself in a rapidly deteriorating credit environment. Originations had peaked at $100M per month but had fallen to $20M per month and losses were climbing at an alarming rate. As pandemic-era stimulus faded, cohorts originating after 2020–2021 began performing dramatically worse than expected — with loss rates 50–75% above plan. Volatility was high, leadership turnover was accelerating, and the company’s capital partners were questioning the stability of the portfolio.
Amid this turbulence, Ensemblex was asked to step in as Interim Head of Credit and serve as a strategic advisor to the CEO. We also embedded support from our data science team to rebuild the company’s modeling and forecasting capabilities. What began as a firefight quickly became a structured effort to stabilize the business, restore credibility with stakeholders, and chart a path back to growth.
Building Clarity in the Fog
Our first task was to understand what was actually happening. The company lacked the “instrumentation” to measure risk in real time — there was no reliable reporting of core credit KPIs, and leadership struggled to articulate why losses had shifted or what actions would have the greatest impact.
We began with a comprehensive diagnostic and a six-month roadmap, then immediately rebuilt core risk reporting. Within weeks, the team had visibility into delinquency trends, roll rates, loss vintages, approval mix, and channel dynamics. The clarity this provided became the foundation for every subsequent decision, including how to communicate the situation to the board and capital providers.
Fixing the Engine While Driving Uphill
With a clear picture emerging, we turned to the two pillars of stabilization: credit policy and loss forecasting:
Credit Policy Optimization
We quickly identified several high-impact levers that were admitting overly risky borrowers into the portfolio. By refining knockouts and tightening specific credit policy rules, we were able to “de-toxify” the incoming population. These adjustments were projected to reduce lifetime losses by ~12%, a critical improvement during a volatile period.
Loss Forecasting Overhaul
The existing originations-vintage forecast could no longer keep up with the changing macro environment. We advised the company to develop a more robust survival-based benchmark model, allowing for dynamic curve shifts, macro overlays, and more accurate forward-looking views. Forecast variance narrowed from ±20% to ±3%, dramatically improving planning, provisioning, and investor communication.
Leading Through Instability
The engagement unfolded during a period of significant organizational change. The CEO, SVP of Risk & Data Science, COO, and Head of Collections all exited. A reduction in force downsized nearly every team, including credit.
Shortly after, a new CEO and Chief Revenue Officer joined the company. Steady credit leadership was essential. Ensemblex became the continuity engine — the institutional memory, the analytical backbone, and the partner capable of maintaining momentum while new leaders onboarded.
Restoring Credibility and Returning to Growth
As forecasting stabilized, credit tightened, and reporting became reliable, confidence began to return. We worked with the company’s capital providers, walking them through the new models, updated policy posture, and proof points demonstrating that future vintages would behave differently than the stressed 2022–2023 cohorts.
This stabilization narrative — underpinned by real model improvements and demonstrable credit discipline — helped the company secure $250M in new funding.
With the foundation rebuilt, the business resumed growth. Monthly originations have since expanded from $15M to over $75M, powered by healthier cohorts, stronger credit infrastructure, and renewed confidence across the organization.
Outcome
Ensemblex didn’t just help the company survive a credit storm; we helped them re-establish control of the ship. Losses came down. Forecasting improved. Capital returned. And the business regained the confidence to grow again — on a much stronger footing.