Upstart Personal Loans: 2020 Review
Upstart underwrites loans with alternative data and artificial intelligence to give fair-credit borrowers a better chance at qualifying and getting a low rate.
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Our Take
4.5
The bottom line: Upstart is a good option for fair-credit borrowers with strong earning potential.
Full Review
Upstart
Min. Credit Score
600
Est. APR
4.99 - 35.99%
Loan Amount
$1,000 - $50,000
Pros & Cons
Pros
Accepts borrowers new to credit.
Fast funding.
Cons
Origination and late fees.
No secured or co-sign option.
Find the Best Personal Loan
Full Review
To review Upstart, NerdWallet collected more than 30 data points from the lender, interviewed company executives and compared the lender with others that seek the same customer or offer a similar personal loan product. Loan terms and fees may vary by state.
Upstart personal loans can be used for a variety of purposes, including debt consolidation, medical expenses, home improvements and college tuition. Most borrowers use their funds to consolidate debt or pay off credit cards, according to the company.
Upstart prides itself on its underwriting model, which uses artificial intelligence and nontraditional data — like college education, job history and residence — to evaluate borrowers. More traditional lenders focus almost exclusively on a borrower's credit report, debts, income and assets.
The company's underwriting helps younger applicants and those with thin credit histories or fair credit but high earning potential qualify for a loan, according to a company spokesperson.
Best for: NerdWallet recognizes Upstart among our list of best personal loans for borrowers with fair to bad credit.
Credit requirements: For applicants with a credit history, Upstart requires a minimum credit score of 600 in most states, no recent bankruptcy or delinquent loans and fewer than six inquiries on a credit report in the past six months, not including inquiries related to student loans, car loans or mortgages. The company also accepts applicants whose credit isn't sufficient to produce a FICO score, according to a spokesperson.
Alternative data use: In 2019, the Consumer Finance Protection Bureau published a blog post crediting the underwriting model with approving more applicants at lower rates than a traditional underwriting model. In a test, the bureau says, consumers with a 620 to 660 FICO score were approved twice as often as a traditional credit model and applicants under 25 were 32% more likely to be approved.
While lenders that use data like college major and work history in borrower evaluations say it gets them better insight into a borrower's financial reality, consumer advocates say it could reinforce existing racial and economic disparities. The CFPB issued a no-action letter in 2017, stating that it wouldn't recommend action against Upstart related to its compliance with the Equal Credit Opportunity Act.
Fast funding: Upstart provides quick loans that typically fund the next business day after approval, except for loans for educational expenses, which are subject to a three-day waiting period. The company says 99% of loans are funded one business day after signing.
Direct payment to creditors: For personal loans used to pay off credit cards, Upstart sends your loan proceeds to your credit card issuers to simplify the debt consolidation process.
Flexible payments: Borrowers can change their monthly payment date anytime through Upstart's online portal.
Hardship program: Borrowers may be able temporarily suspend payments in the event of economic hardship (such as a job loss), subject to Upstart's approval.
Fees:
Origination fee: 0.0% - 8.0%.
Late fee: 5% of past due amount or $15, whichever is greater.
Unsuccessful payment fee: $15 per occurrence.
How to qualify:
Upstart is available in all 50 states.
Minimum credit score: 600 (in most states).
Minimum credit history: None.
Minimum annual income: $12,000.
Must have a full-time job or offer starting in six months, a regular part-time job or another source of regular income.
No recent bankruptcy or outstanding delinquencies.
Loan example: The average three-year loan with Upstart has an annual percentage rate of 15%, according to the company. Upstart says its model approves fair-credit borrowers at a lower rate than a traditional model.
For a borrower with fair credit, a three-year, $10,000 personal loan at 21.8% APR would have monthly payments of $381, according to NerdWallet’s personal loan calculator.
Before you shop for a personal loan
Pre-qualify on NerdWallet
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How to apply with Upstart
You can check your rate on Upstart’s website. Enter the amount you want to borrow and answer questions about your credit score, level of education and other details to see an estimated rate for a loan.
Personal Loans Rating Methodology
NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including: soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus, and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews. Read our editorial guidelines.
