Upstart was launched by ex-Googlers Dave Girouard, Paul Gu and Anna Counselman in May 2014.
Unlike most peer-to-peer lending platforms, Upstart’s unique business model focuses on giving young borrowers the chance to improve their credit by looking at other factors to determine their ability to repay the loan.
“Identifying quality borrowers with limited credit history is the holy grail of consumer finance,” says Jocelyn Ding Vice President at Google, “Leave it to a team from Google to find a data-driven solution to this age-old problem.”
Upstart has originated over $190 million in loans so far and on July 16 2015, the platform announced a $35 million Series C funding round to help them continue to grow their service.
If you are looking for a loan and need to improve your credit score or an accredited investor looking for highly-vetted P2P loans, Upstart might be the right platform for you:
Investors
Upstart uses a vigorous underwriting model, verifying each applicant’s: identity, credit history, academic credentials and employment. As a result, investors get access to access to high-quality borrowers.
This model has been working well, since approximately 98% of Upstart loans are current or paid in full. Borrowers whose loans are approved have an average FICO score of 689, an average income of $116,616, and 93.1% of them are college graduates. The majority of Upstart’s loans are taken out to refinance credit cards.
Aside from a demographic of borrowers that investors don’t usually get access to, other pros for Upstart investors include automatic investing, no fees and the option to invest in an IRA (Individual Retirement Account). Upstart also doesn’t earn any fees on loans that default, which is a detail that most investors will appreciate.
Other platforms like Prosper still earn fees on defaulted loans, leaving lenders to feel that they are the ones taking on all of the risk.
Borrowers
Upstart is a secure platform where borrowers can apply for loans ranging from $3,000 and $35,000. Rates on Upstart are on average 30% lower than other lenders and there are no pre-payment penalties.
Borrowers can get a loan to: pay off credit cards or student loans, consolidate debt, take a course or boot camp, pay for college or grad school, make a large purchase, relocate, pay medical bills, start or expand a business, buy a car and more!
“Upstart has been instrumental in helping me meet my financial goals and the customer service is seriously outstanding,” said one user who left a review on TheBestCompanies.com, “Everyone I talk to treats me like a friend … I applied at 10 am and was approved by 4 pm. Upstart is a game changer.”
To be eligible you must be a citizen or permanent resident living in the U.S. (not residing in West Virginia) and be at least 18. Upstart also requires that you have a valid email, verifiable name, date of birth and social security number.
To be accepted borrowers need a full-time job, a job offer starting in 6 months, a regular part-time job or other regular income and have a personal bank account with a U.S financial institution (with a routing transit number). Upstart’s minimum credit requirement is 640.
Conclusion
For a company that has been around for less than two years, Upstart is doing a great job cementing its place in the peer-to-peer lending industry. They have received many positive reviews from borrowers, including a rating of 4.9 out of 5 stars from 776 users on Credit Karma.
Upstart’s process is fairly simple and their staff are there to help with any questions you might have along the way – they’re known for great customer service! Loans get approved quickly, and since they decide loan eligibility on several factors, even borrowers with poor credit scores can get low rates.
Investors using Upstart get access to high-quality borrowers that wouldn’t normally be approved for a loan on other P2P lending platforms due to their lower credit scores. The fact that Upstart doesn’t make money on defaulted loans is another way that they are differentiating themselves from other P2P lenders.
