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Upstart Personal Loans gives you quick approval and considers more than your credit score
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By : Mr Credit Card

Upstart: Quick Approvoal Loan that looks at more than your credit score

Upstart is an AI based lending platform founded by a group of ex-Googlers that matches borrowers and their partner lenders. While most lenders base their loan underwriting on FICO scoring models and income, Upstarts looks beyond these factors and considers variables like your which college you attended, your GPA score, test scores and work history. Upstarts says their AI model is able to approve about 43% more applicants than conventional credit scoring models and yet give consumers an interest rate on the loan that is on average 43% lower. In an internal study, Upstart found that they were able to process 73% of their loans automatically with just AI and without any human interaction. Because of their use of AI, Upstart is able to process your loans very quickly (many customers have reported that the whole process just took a couple of hours - including uploading of required documents) and get get your cash deposited into your banking account the next business day.


Example of Approval Process

I have roughly $22,000K in credit card debt (mostly 24%) and was looking to consolidate this into a loan with lower interest rates. Credit Karma had some recommendations and I was pre-qualified for a few. Among them, upstart had the lowest rate (13%), though there was a $800 origination fee.

I applied and was approved on the spot for a $23,000 3 Year loan for $700 a month payment. I was just required a signing of the promissory note and was not asked to provide additional information like College Transcripts, Bank Statements, Pay Stub etc, which others have been.

My other stats are that I have a TransUnion FICO score of 680, Bachelor of Science and my salary was $80,000. During your application, you will be asked to fill in the college you went to, graduation date and income.


Pros and Cons

Pros Cons
  • Looks at other factors other than credit scores
  • Very quick approval for many applicants
  • More likely to approve you than other lenders
  • Friendly customer service
  • Pre-qualify with no impact on credit score
  • Give loans to students on their partner coding schools
    		•
    • May charge origination fee
    • No joint, co-signed or secured loans
    • May have to produce documents like college diploma


    Terms of Loans and Fees

    Upstart gives unsecured personal loans that range from $1,000 to $50,000 and the maturity is either 3 or 5 years. Upstart only allows for single applicants (no joint applicants) and does not offer any secured loans. The origination fee ranges from 0% to 10%. You can pay off your loans with no penalty.

    While most people take out Upstart personal loans for credit card consolidation, Upstart will also give loans to students of their partner coding bootcamps. Below is a table that summarizes it's key terms.

    Loan Amount $1,000 to $50,000
    Maturity 3 or 5 years
    Origination Fee 0% - 10%.
    Late Fee Greater of 5% of monthly past due or $15
    ACH Return or Check Refund Fee $15
    Paper Statement $10 per request


    Requirements

    Upstart is very upfront about their requirements for you to apply for their loans. Read this section carefully to make sure you meet these requirements before you apply.

    • Credit Scores - Upstart will accept applicants with no credit history or at least fair credit scores. Most successful Upstart customers who have decent rates have at least a mid 600 credit score when they apply.

    • Debt to Income Ratio - Upstart looks at one's monthly debt to pre-tax income ratio. They have specifically stated that for applicants who reside in Connecticut, maryland, New York or Vermont, Debt (excluding rent or mortgage) cannot exceed 45%. For all other states, your debt to income cannot exceed 50%. Applicants from their partner coding bootcamps are exempt from this requirement.

    • No Bankruptcy within the last 12 months

    • No public records within the last 12 months, unless the public records consist only of paid civil judgments or paid tax liens - This is an absolute NO NO for ANY credit application. You will simply be turned down if you have an outstanding public record on your credit report which is not settled.

    • No Delinquent accounts

    • Number of Inquiries - You must have fewer than 6 inquiries on your credit report in the last 6 months, not including any inquiries related to student loans, vehicle loans, or mortgages.

    • Job Requirements - Applicants need to have a full-time job or a job offering starting in 6 months. This requirement is exempted if you are accepted to Upstarts partner coding bootcamp and will seek employement after graduation.


    Eligibility

    Here are the very basic eligibility requirements to apply for an Upstart Loan.

    • Must have US address which you are currently residing in (unless you are an active military personnel on active duty).

    • Age - Applicants must be at least 18 years old. If you are residing in Alabama and Nebraska, you need to be 19 years old to apply.

    • Bank account - You will need a bank account and provide your routing number in order for you to receive your funds.


    Benefits of applying for Upstart

    Potential for very quick approvals with or without additional documents

    Because Upstart uses sophisticated AI and looks at other factors aside from your FICO score or income, they are able to approved many applicants quickly without the need to provide additional documents. According to them, more than 75% of loans are approved automatically. Once you agree to the terms and sign the promissory note, funds will be delivered to you the next business day. Here are a couple of comments from customers who have had quick approvals without any documentations.

    Both my wife and myself took out Upstart loans 4 months apart. Hers was approved within an hour. Mine took a couple of days. Though I have more debt than my wife (in my name), she had lower income than mine. Otherwise, we had similar credit scores (about 720 with TU) so I do not know why mine took a day longer to approve. But we both got a good interest rate which allowed us to consolidated our credit card debts (around 25%) with our Upstart loans (around 12%).


    Upstart looks at factors other than FICO scores

    Upstart looks at more than your FICO score or income when they evaluate your application. They also look at your college degree, what college you went to and what is your current job. Here is an example of someone who got approved for Upstart when banks and credit unions will not approve any loan application.
    I have a 5 year upstart loan of $10,000 at 11%. My credit score was 690 at the time I applied and got approved. I got this loan to consolidate my credit card debt which was averaging about 25% to 27%. Due to my FICO score, I could not get any loans from banks and even credit union and so I had to rely on online lenders. Upstart gave me the best rate and couple also denied me. Unlike others, Upstart did not request any documents from me.


    Though you may have to provide things like your Bank Statements, College Diploma and have Verification Calls

    The good thing about Upstart is that they look at factors other than your credit score and income. Having said that, they may also require you to submit documents like bank statements, pay stubs and college diploma. Some applicants also have to get on a 5 minute verification call. Here are what some customers have said.

    I took out an Upstart loan and was asked to provide my bank statements showing my direct deposit from my employment. As a reference, my TU score was 680 with one 3 year old derog and the rate I got was 18%.


    I took out a loan with Upstart and got approved for $10,000 for a rate of 8% for 3 years. There was a $500 origination fee so the actual APR was more like 10%. I was asked to upload my college transcripts though which I found a little weird. That delayed my loan approval because I actually had to go look for it.


    Money is deposited in your bank account, which means that....

    Like most consumer loans, yours will get deposited into your bank account. You will then be free to use the cash as you please. If you are taking out a loan for debt consolidation, some loan companies will actually deposit the money with your other creditors (like your credit card companies), which makes things a little more convenient.

    You can apply for a second upstart loan and re-apply if decline their offer but want to re-apply again..

    Upstart allows you to apply for a second upstart loan. Here are the conditions for applying again.

    If you have paid off existing Upstart Loans - If you have already paid off an old Upstart Loan and have made your last 6 payments on time, you can re-apply for a second loan within 14 days of your last payment. If you were late on one of your last 6 months, you need to wait for 60 days before you can apply for a second upstart loan.

    If you have got pre-approved for an upstart loan, the offer is good for 2 weeks. If you decide not to take up the offer but change your mind after the offer expired, you have to wait another 2 weeks (14 days) before you can apply again. Below is a customer's story of this happening.

    The Backdrop - I was looking for a $25k personal loan to payoff my credit card debt and consolidate everything. My credit card interesr rates averaged between 25% and 30%. I tried most of the pre-qual sites like Upstart, Lending Club, Avant, Prosper, Happy Money and Promise. Only Lending Club and and Upstart approved me and both for about 20%.

    Day 1 - Checked pre-qualification with a bunch of sites (mentioned earlier) with a TU score of 680. For upstart, I qualified for $30,000 for 3 years at 19.99%. I did not proceed because I wanted a lower rate.

    Two Weeks Later - Got an email from upstart letting me know that my quote has expired. And was told I could reapply two weeks later (ie 2 weeks after the expiration for the initial quote).

    Applied Again 2 Weeks Later - My credit score has improved to 700. I applied for Upstart again and I pre-qualified for up to $50,000. I took the option of $25,000 for 3 years at 7.99% and applied for it. This is much lower than the first offer and much lower than my existing credit card APRs.

    Documents Needed - I had to submit a photo of my college diploma (handing on my wall and use my phone to take a picture of it). Upstart also scheduled a "verification call" with me the next day. Next Day - Verification Call and Approval - The call lasted 5 minutes and I was asked to verify my name, address, email address, company I work for. I was even asked if I had any wage garnishments!! After the call (which lasted a couple of minutes), I was told that they would submit my answers to the "credit inspector" and that I should hear from them in 1-2 business days. I got an email 15 minutes later with the approval.

    Loan Deposited into Bank Account - In the approval email, it said I would get the funds within 3 business days. It arrived the next day. I used it to pay off all my credit card debts immediately. This loan has saved me a few hundred dollars in monthly payments and I will be done in 3 years.




    Our Take: Great for those with Good Cash Flows

    Upstart Loan will appeal to those either have very little credit history or those with fair credit in the mid to high 600 score range and are able to meet their requirements and would be happy with taking either a 3 or 5 year loan. As Upstart places a greater importance on your cash flow and income rather than just credit scores, those of you who have been rejected by other lenders may find that Upstart might approve you. Futhermore, Upstart claims that their rates are 43% lower than lenders who rely only on credit scoring models and since they have more banking partners than many competitors, you may indeed end up with the best rates (though your mileage may vary!).

    Upstart also has a very quick approval process and you could get your loan deposited into your bank account as soon as the next business day. Having said that, some of you may be asked to produce and upload documents like drivers license, bank statements and even college diplomas or transcripts. That may set back your approval time frame.

    There are a few things you have to be aware of. Firstly, Upstart does not allow co-signers on their loans. For those of you looking to get this loan to consolidate your existing credit card debts, Upstart does not offer the convenience of paying your creditors directly. Instead, you will get your cash deposited into your bank account and you can then pay off your creditors with the loan.

    If you are looking for an unsecured personal loan, I would definitely recommend that you give Upstart a shot. You can go through their pre-approval process (with no impact on your credit score), see what you offered, compare with others (that also offer pre-approval quotes) and then decide whether you want to pull the trigger or not. There is no harm seeing what offer you can get from them. You may find that they will offer you the best rates compared to other lenders. The application and approval process is known to be very quick and this will no doubt appeal to those of you looking a loan in a hurry.