How to tell whether a client pays well (before you lend)
By Equipo Prestafolio
The four questions that decide a loan, how to calculate repayment capacity with real numbers, and what to do when the client is new and you have no history.
The best predictor of whether someone will pay you is how they paid before. Not how nice they are, not their story, not how much you like them: their past payment behaviour. And the second best is a two-line calculation: does the instalment fit inside what they earn? Everything else (security, references, guarantors) is what you do when those two signals are not enough.
The four questions
Question | What you measure | How you check it |
|---|---|---|
Can they pay? | Capacity: income against instalment | A division |
Do they usually pay? | Behaviour: their history | Data, not impressions |
Do they want to pay? | Intent: what the money is for | Conversation and coherence |
And if they do not? | Backing: security or guarantor | Documents |
If the first one fails, the other three will not save you. A client with the best intentions in the world and an instalment that does not fit their income will stop paying: it is not a character problem, it is arithmetic.
The repayment capacity calculation
There is no mystery here, and it is the part most people skip:
Step | Calculation |
|---|---|
| What comes in |
| Rent, food, utilities, other debts |
| Income − expenses |
| Between 25% and 35% of the surplus |
An example. A salesperson with an income of 30,000 a month and fixed expenses of 21,000:
Item | Amount |
|---|---|
Monthly income | 30,000 |
Fixed expenses (includes another debt of 2,500) | −21,000 |
Surplus | 9,000 |
Maximum advisable instalment (30%) | 2,700 |
With a maximum instalment of 2,700 a month, over 12 monthly instalments at 2% on the balance, the loan that client can carry is about 28,500. If they ask for 60,000, the answer is not "no": it is "I can give you 28,500, or 60,000 over 24 months". Adjusting the term or the amount turns a rejection into a sale that also gets repaid.
And that 30% is not arbitrary: above a third of the surplus, any surprise (an illness, a slow month, a broken appliance) comes straight out of your instalment. The headroom is not generosity, it is your own risk management.
History: the signal that weighs most
If the client has borrowed from you before, you are sitting on gold and probably not using it. These five figures, per client, are worth more than any conversation:
Signal | What to look at |
|---|---|
Punctuality | Instalments paid on time ÷ total instalments |
Average delay | Mean days late, not the worst case |
Maximum delay | The worst case does matter: 3 days is not 45 |
Loans repaid | How many they actually completed |
Write-offs | How many they never finished paying |
The usual trap is looking only at whether they are late today. A client who is up to date but has paid late on 18 of their last 24 instalments is not a good client: they are a client who forces you to chase them, and chasing costs money. A client who paid late once, two years ago, is.
And another: recent lateness weighs more than old lateness. Someone who paid badly three years ago and perfectly for the last twelve months is improving. Someone who paid well for three years and badly for the last three months is in trouble right now, even if their historical average still looks fine. If you build your own score, give more weight to the last twelve months.
What you do when the client is new
This is the real question, because nearly everyone is new the first time. With no history of your own, in order of reliability:
- ID document, verified and copied. It is the foundation of everything else. With no identification there is no assessment and no collection: you cannot sue someone whose identity you do not know.
- Verified address. A utility bill in their name. Ideally: walk past the house.
- Proof of income. A payslip, or (in informal work) three months of movements, the shop's ledger, whatever exists. Imperfect, but better than their word.
- Two personal references who answer the phone. Actually call them. Half the value is in whether the number works.
- Start small. The amount is your risk instrument: lend little, over a short term, and raise the amount once the history exists. It is the cheapest way to buy information.
- Payment history shared between lenders. If you can access payment information about that same person with other creditors (formal or not) that is the most valuable signal you can get for a client who is new to you but is not new to borrowing.
Red flags
Flag | Why it worries |
|---|---|
Extreme urgency ("I need it today") | Haste prevents verification. That is often the point |
Reluctant to hand over an ID document | End of the conversation |
Address or phone that do not check out | If you cannot find them now, you certainly will not when collecting |
Borrowing to pay another debt | You are refinancing a problem, not financing a project |
Accepts any rate without arguing | Someone who does not intend to repay does not negotiate the cost |
References who do not pick up | Check beforehand, not afterwards |
The fifth deserves a moment. When somebody accepts any condition without blinking, the simplest explanation is not that they trust you: it is that the cost does not matter to them, and the cost only stops mattering if you do not plan to pay it.
Build your own score
You do not need a sophisticated model. Five signals, a weight each, and a mark from 0 to 100. What matters is not the model's precision, it is applying the same criteria to everyone: the "I like this one" bias is the most expensive error in the portfolio.
A reasonable weighting, and the one we use:
Signal | Weight |
|---|---|
Historical punctuality | 55% |
Arrears they are in right now | 20% |
Loans written off | 15% |
Depth of history (how many loans) | 10% |
With two nuances that matter more than the weights: the last twelve months count double, and a recent write-off should sink the score on its own, no matter how good the rest looks. A write-off is not a big delay: it is a different category.
And a rule of statistical honesty: no signals, no score. A new client is not a zero, they are a "no history". Treating the absence of data as a bad mark is the fastest way to turn away good clients.
Summary
- Capacity first (a division), then history, then security.
- Prudent maximum instalment: 25-35% of the surplus, not of the income.
- A client who is up to date but always late is not a good client.
- Recent lateness weighs more than old lateness.
- Without a verified ID document there is no assessment, no collection and no lawsuit.
- No history is not a zero: it is no history.
Prestafolio builds that history automatically, attached to the client's ID document rather than to your own record: every on-time instalment, every delay and every repaid loan feeds a trust level from 0 to 100 that you can check before you lend. And because the history follows the person, it includes how they have behaved with other lenders on the platform, not just with you. It is not an external credit bureau (Prestafolio does not query credit registries, banks or third-party lists): it is real payment behaviour inside the platform. See Trust and the bureau and Registering a client.