Credit checks are not fool proof. I would guess that 30-40% of their portfolio has a default on it.
Credit checks give you good data you feed into your model. It appears the model isnt working as intended.
I would also argue that their default rate at 3.4% is actually really good considering its unsecured debt to a risky portion of the population.
What isnt good is that their margin isnt good enough to make a profit out of that level of default.
There is a reason cash converters etc etc charge what they do. High risk, high rate.
Ann: Q3 FY22 Results - Zip Accelerates Path to Profitability, page-68
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