Upstart provides personal loans to people with various credit scores and looks at more than just your credit score to determine if your loan application can be approved.
They also utilize your education and experience during the approval process. With flexible terms and loan amounts with no prepayment penalty, Upstart is a great fit for many applicants.
With Upstart, you can check your rate without impacting your credit score. And since Upstart reviews more information beyond your credit score to set the loan rate, you may get a lower offer compared to other personal loan companies so that you can save money over the term of the loan.
Upstart Personal Loans
Upstart provides personal loans from $1,000 to $50,000 with APRs from 7.46% to 29.99%. Applicants can choose between three and five-year terms with no prepayment penalty. The amount of loan you can be approved for depends on your income, the state in which you live, and other applicable terms. Interest rates are also dependent on several factors, including your credit score.
All Upstart personal loans have a fixed interest rate, so you don’t have to worry about fluctuating monthly payments. Origination fees range from 0% to 8% and are based on the amount borrowed. The fee is deducted from the loan before your funds are dispersed and is non-refundable. Also, note that co-signers are not allowed on Upstart loans.
Upstart focuses on borrowers who may not have traditional credit scores but do have a solid work history and education. The minimum credit score is 620, but there is no requirement for the length of credit history or income.
The average borrower with Upstart also has a low debt-to-income ratio and is between 22 and 35 years of age. Despite the required credit minimum, the average score is around 692 and the average income is around $100,000.
Some borrowers are using these loans for debt consolidation. Those who qualify for lower interest rates could potentially save money when consolidating credit card debt.
Each loan is underwritten specifically for the individual applicant. A recent college graduate may be assessed based on academics while someone with a solid work history and substantial credit profile will need to demonstrate a stable income and good credit.
The first step is to determine the what rate you could be approved for. Start off by answering just a few questions and find out the best rate available to you. This step does not impact your credit score. A few questions are necessary about your employment and education, including what school you attended, your area of study, and what company you currently work for.
You can then determine if you want to proceed with the application based on your loan offer. This step is nearly instant and is based on the general information you provide. It isn’t a guarantee of approval.
The next step is to complete the actual application, which will be reviewed by the lender. At this point, you provide personal information such as your social security number, driver’s license, and other data necessary for the lender to review your file.
Upstart verifies your employment and education, plus runs an official credit report. If you are self-employed, you must have had your own business for at least a year and filed a tax return.
This process may take longer compared to other online lenders because Upstart reviews more information than just your credit report. Once the application is approved, you’ll be able to see your exact terms, the amount you’re approved for, the interest rate, and monthly payment amount. At this point, you can review and accept the loan.
The final step is to set up an online account along with automatic monthly payments to repay the loan. If you wish, you can pay off the loan early at any point with no penalty. You can also apply for a second loan through Upstart if you’ve made your payments on time for six consecutive months. Once the loan has been paid off, you must wait 60 days before applying for a new loan.
Once You’re Approved
With most loans, you’ll receive the funds as fast as one day. For education loans, there is a three-day waiting period. Your first payment will be due 30 days after you have been approved and received your funds. You can set up automatic payments, manual ACH payments or pay by check. You can also change your payment preference at any time.
These personal loans do come with fees you may incur in certain situations. A late payment fee of $15 or 5% of the monthly past due amount is due each time you are late making your payment. If the check or ACH is returned, you’ll be charged a $15 refund fee.
What makes Upstart different from other lenders is their ability to use broader factors to determine whether or not you qualify. Instead of just basing approval on credit score and income, they also look at education, including the academic program you were in.
This allows more applicants to be approved even if they lack a credit history, which is one reason this loan appeals to college graduates and young professionals.
The applicant does not need a job or college degree to qualify for this particular loan. Another benefit, is that you have some flexibility with making payments. You can choose bi-weekly or monthly payments. If you run into financial trouble, you may qualify for different repayment options.
Upstart was founded in 2012 by three former Google staff: Dave Girouard, Paul Gu, and Anna Counselman. The team’s goal was to create a lending company that considered other factors beyond credit history to give more people access to money when they needed it. Instead of basing every application on the same set of criteria, it would be customized to each person’s situation, experience, and education.
What to Consider Before Taking Out an Upstart Personal Loan
Upstart is a great option for people looking for a personal loan who may not qualify for other financial products. This company offers unique features to improve a person’s chance of approval. However, it isn’t a fit for everyone. Before taking out any personal loan, ask yourself these questions.
Do you qualify?
While you may not need to have a traditional credit history with a good to excellent credit score, you will need some strong criteria to get approved for an Upstart loan. You can’t have bad credit with a ton of late payments or other negative information.
For Upstart, no credit is preferable to bad credit. But even if you have very little to no credit, you’ll still need other criteria to qualify. You may need to show a stable income or long-term employment. A college degree in a competitive field may also improve your chances.
Have you compared other offers?
While Upstart offers some of the lowest rates for people who lack traditional credit, it may not be the best rate. Compare Upstart to other financing options, such as a traditional loan at a bank with a co-signer. You want to ensure you get the best deal for your money, so it’s safe never to make any assumptions until you fully compare all options.
What are your future financial goals?
Any time you take out a personal loan, it’s best to pay it off as quickly as possible to reduce interest and other fees. To accomplish this, try to increase your payments over the minimum amount required. If your credit history is new, it’s also important to establish a positive credit history to make it easier to be approved for financing in the future, like a mortgage or car loan.
An Upstart loan can provide a solid foundation if you make your payments on time. The company provides your loan payment history to the Trans Union credit bureau, which can help increase your credit score over time. On the flip side, they also report late payments, which can damage your credit so be sure to be timely on a regular basis.
Before taking out a loan with Upstart or any other lender, make sure it’s going towards something you need and work hard to get the best terms possible. In some situations, a secured loan may be the best answer. In other scenarios, waiting to pay cash or establishing a stronger credit history may be the ideal option.
You can always discuss your options with a financial counselor to help you understand the impact of the choices you make. Look at the overall cost of the loan as well as how much you must pay monthly to determine if you can afford the loan and if it makes sense in your situation.