Upstart Personal Loans: 2021 Review

Upstart underwrites personal loans using alternative data and artificial intelligence to give bad- and fair-credit borrowers a better chance at qualifying and getting a low rate.

Annie MillerberndNovember 12, 2020
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Our Take

4.5

NerdWallet rating 

The bottom line: Upstart is a good option for borrowers with low credit scores and strong earning potential.

Best Personal Loan for Bad Credit

Upstart

on Upstart's website

on Upstart's website

Min. Credit Score

580

Est. APR

8.27 - 35.99%

Loan Amount

$1,000 - $50,000

Pros & Cons

Pros

  • Accepts borrowers new to credit.

  • Able to fund loans within one business day.

  • Offers direct payment to creditors with some debt consolidation loans.

Cons

  • Borrowers can choose from only two repayment term options.

  • Charges origination fee.

Compare to Other Lenders

Upstart
Upgrade
BestEgg
NerdWallet rating 
NerdWallet rating 
NerdWallet rating 
Est. APR

8.27 - 35.99%

Est. APR

6.94 - 35.97%

Est. APR

5.99 - 29.99%

Loan Term

3 to 5 years

Loan Term

3 to 5 years

Loan Term

3 to 5 years

Loan Amount

$1,000 - $50,000

Loan Amount

$1,000 - $50,000

Loan Amount

$2,000 - $35,000

Min. Credit Score

580

Min. Credit Score

580

Min. Credit Score

600

Compare estimated rates from multiple lenders

Compare Rates

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Full Review

To review Upstart’s personal loan, NerdWallet collected more than 40 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 and home improvement. Most borrowers use their funds to consolidate debt or pay off credit cards, according to the company.

Upstart’s biggest differentiator is its underwriting model. The company uses artificial intelligence and nontraditional data — like college education, job history and residence — to evaluate borrowers. More traditional lenders, like banks, 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 low credit scores but high earning potential qualify for a loan, according to a company spokesperson.

Upstart is best for borrowers who:

  • Have at least a 580 FICO score and strong earning potential.

  • Value fast funding.

  • Want to consolidate other debts.

Upstart at a glance

Credit building

  • Soft credit check to pre-qualify.

  • Reports payments to three credit bureaus.

Affordability

  • APRs are consistent among lenders targeting similar borrowers.

  • Charges origination and late fees.

  • No rate discount for autopayments.

Loan flexibility

  • Offers direct payment to creditors with credit card consolidation loans.

  • Funds most loans in one business day.

  • Borrowers can use an Upstart loan to refinance a loan from another lender, but not an existing Upstart loan.

  • Loans available in all 50 states.

Transparency

  • Clearly discloses rates and terms on website.

  • Comprehensive FAQ answers many common borrower questions.

Customer experience

  • Offers multiple customer contact channels.

  • Customer service is available seven days a week, but not 24/7.

Where Upstart stands out

Fast funding: Upstart provides quick loans that are typically funded the next business day, except for loans for educational expenses, which are subject to a three-day waiting period.

The company says borrowers can pre-qualify to see their rate in five minutes, and 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 an unlimited number of times through Upstart's online portal. Changing your payment date doesn’t change your original due date, though, and the 15-day grace period for late fees applies to your original due date.

For example, if your loan is due on the 8th of the month and you move your payment date to the 10th, your payment won’t be late because it’s within the due date’s grace period. However, if you move your payment date to the 25th, it will be late and you may be charged the late fee.

Multiple ways to pay: The lender lets borrowers pay via mailed check, phone, online and with automatic payments.

Alternative data use: In 2019, the Consumer Finance Protection Bureau published a blog post crediting Upstart’s underwriting model with approving more applicants at lower rates than a traditional underwriting model. In a test, the bureau says, consumers with FICO scores between 620 to 660 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 gives them better insight into a borrower's financial reality, consumer advocates say it could reinforce existing racial and economic disparities.

Where Upstart falls short

Limited repayment terms: Borrowers can choose a three- or five-year repayment term. Those terms are somewhat common among online lenders, but they don’t give you room to shorten the term and save on interest or extend it for lower monthly payments.

Origination fee: Some lenders that use Upstart’s online lending platform charge an origination fee, which isn’t uncommon with personal loans, but it can drive up your annual percentage rate.

No co-signed, joint or secured loan options: Adding a co-signer, co-borrower or securing a loan can help borrowers who may not otherwise qualify get a reasonable rate on a personal loan. Upstart only offers unsecured loans.

How to qualify for an Upstart loan

  • Minimum credit score: 580.

  • Minimum credit history: None; borrowers with credit histories too limited to produce a FICO score may be accepted.

  • Minimum gross income: $12,000.

  • Employment: Full-time job, full-time job offer starting in six months, a regular part-time job or another source of regular income.

  • Must have a U.S. residential street address where borrower resides (unless military personnel on active duty).

  • Must be at least 18 years old.

  • Valid email account required.

  • Personal bank account with U.S. routing number required.

Loan example: A five-year, $12,000 loan with a 23.4% APR would cost $341 in monthly payments. You’d pay $8,460 in total interest on that loan.

How to get an Upstart loan

Pre-qualify on NerdWallet

NerdWallet recommends comparing loans to find the best rate for you. Pre-qualifying may get you personalized rates from multiple lenders that partner with us, including Upstart. Pre-qualifying will not impact your credit.

Apply on 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.

on Upstart's website

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.