"While lower delinquency and CNL is always preferred", this is not true. Affirm CEO/CFO mentioned that they control their default rate by pricing those risks accurately. Same thing for Upstart: if the loan is risker, the loan will be more expensive. The key for them is to keep the "spread" at the same level. Rising default rate alone is not necessarily an issue since it tells only half of the story.
"While lower delinquency and CNL is always preferred", this is not true. Affirm CEO/CFO mentioned that they control their default rate by pricing those risks accurately. Same thing for Upstart: if the loan is risker, the loan will be more expensive. The key for them is to keep the "spread" at the same level. Rising default rate alone is not necessarily an issue since it tells only half of the story.