Upstart offers loans for people with bad credit but good grades


People with bad or no credit are often forced to take loans with high interest rates or unfavorable terms, but wants to reverse the scenario.

Billing itself as a “Kickstarter for Students,” the company considers other forward-looking factors besides a person’s credit score, or FICO, to decide how likely you are to repay.

It’s kind of like the questions your partner’s parents might ask you the first time you meet them: Where did you go to school? What did you study? How much will you earn in the future? Is it a reliable career?

“Our job is to see signals about a person that others don’t see,” said company founder Dave Girouard.

“FICO is inherently backward looking, which is what you’ve done with credit in the past,” he added. While with Upstart he said, “We like to see it as identifying someone’s potential, where they’re going.”

Clients like Dave Collier, a programmer employed by Trinity University, have used Upstart to change careers. He left his job in the oil sector, hard hit since the fall in the price of crude oil, and enrolled in programming courses. It seemed like a smart bet, but the tuition fees added $16,000 to his existing debt. Now he owed over $50,000.

By using Upstart, he was able to consolidate $22,000 in credit card debt and reduce his interest rate from 19% to 7.5%, a savings of $5,510.

Some in the industry are skeptical and wonder if the model could withstand the next economic downturn.

“The jury will be out until we’re in a recessionary environment and delinquencies and defaults increase, and that’s when you can really see which form of lending was worth the risk and which isn’t. was not,” said Greg McBride, chief financial analyst at

But for now, borrowers are happy to find a new life, at a reduced rate.

“I’m going to buy a house sooner,” Collier said. I’m going to get married sooner.”

For more information, see


About Author

Comments are closed.