Upstart personal loan review: A lender that considers your education and occupation

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In a Nutshell

Upstart is an online lender that uses data beyond your credit scores — like occupation and education — to help determine your likelihood to repay. But Upstart still has credit score requirements and may charge high interest rates and origination fees.

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Pros Cons
Considers factors beyond your credit scores May charge an origination fee of up to 8% of the loan amount
Potential to receive funding within one business day after accepting loan Annual percentage rate may be high
  Limited loan-term options

What you need to know about Upstart personal loans

Upstart is an online lender. Terms vary by state, and loans aren’t available to residents of Iowa or West Virginia.

Considers factors beyond your credit scores

Upstart looks beyond your credit scores when considering you for a personal loan. In addition to your credit scores, credit reports and current income, it considers your occupation and employer, any degrees you earned, your area of study, and the school or university you attended. Founded by former Google employees, Upstart uses artificial intelligence and machine learning to automate the borrowing process.

That said, Upstart tends to lend to people who have fair or good credit scores.

Interest rates may be high

All Upstart personal loans have a fixed interest rate. The starting interest rate is higher than what some other lenders offer, and the maximum is one of the highest currently charged by traditional personal loan lenders. Upstart notes on its website that the average APR on a three-year loan is 24.53%.

Minimum three-year term

Upstart offers limited loan-term options. You can choose either a three- or five-year term. But there’s no prepayment penalty, so you can pay off your loan sooner without a fee. If you want a shorter loan term, you’ll need to look elsewhere.

A closer look at an Upstart personal loan

If you’re considering a personal loan through Upstart, here are some additional details to know.

  • In most states, Upstart’s personal loan amounts range from $1,000 to $50,000. (Upstart may offer different terms on Credit Karma.)
  • Co-signers aren’t accepted.
  • Upstart charges both late fees and origination fees, with origination fees ranging from 0% to 8%.

Here are some of Upstart’s minimum requirements to get a loan.

  • FICO or VantageScore of 620 or higher when you apply directly through Upstart
  • No bankruptcies or delinquent accounts on your credit reports
  • Fewer than six inquiries on your credit reports in the previous six months, not including inquiries related to student or auto loans or mortgages

And take note: Upstart may withdraw your loan approval if there’s a significant drop in your credit scores or you take on additional debt between the time your loan is offered and when you receive funding.

Who an Upstart loan is good for

An Upstart personal loan could be good for someone with a limited credit history and fair to good credit. Since the lender lets you apply for prequalification, Upstart could also be ideal for someone who wants to shop around and compare loan offers. Remember, being prequalified isn’t a guarantee that you’ll be offered a loan — you’ll still need to provide more information before you can be approved and receive an official loan offer.

If you’re considering borrowing a larger amount, you may want to look elsewhere. If you were charged the maximum origination fee — 8% — on a $20,000 loan, you’d end up paying $1,600. Lenders typically deduct the fee from the loan amount.

How to apply with Upstart

You can apply for prequalification on Upstart’s website. To apply for prequalification, you’ll need to provide information like your name, birthdate, address and phone number, and desired loan amount. You may also have to provide your primary source of income, as well as savings, checking and investment account balances.

Completing the form triggers a soft credit inquiry, which doesn’t affect your credit scores. If you prequalify, you’ll be able to see your estimated loan offers. If you choose an offer and are approved, you could receive your funds by the next business day, unless you plan to use your loan for education expenses. In that case, there’s a three-day waiting period.

Alternatives to an Upstart personal loan

If you’re not sure if an Upstart personal loan is right for you, here are a couple of options to consider.

  • SoFi: A SoFi personal loan may be good for someone who wants more loan-term options.
  • TD Bank: If you want a personal loan without an origination fee, TD Bank may be worth exploring.

About the author: Marcie Geffner is an award-winning freelance reporter, editor, writer and book critic. Her work has been featured online and in print by the Chicago Sun-Times, Fox Business Network Onlin… Read more.