Upstart review: Personal loans for workers with limited credit history or low credit scores

Upstart review: Personal loans for workers with limited credit history or low credit scores

Upstart offers personal loans that don’t solely rely on credit score.

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The bottom line: Upstart Personal Loans could be the right lender if you have a strong work and education history, but you have a low credit score or limited credit history.

Upstart personal loan amounts and interest rates

Upstart Personal Loans’s loan amounts range from $1,000 to $50,000. The minimum amount is lower than other comparable lenders, so Upstart could be a good choice if you need a little cash to tide you over. However, borrowers in four states are subject to higher minimum loan amounts: 

Massachusetts: $7,000 Ohio: $6,000New Mexico: $5,100Georgia: $3,100

Upstart has two options for repayment, with term lengths of 36 or 60 months. There are no prepayment penalties, though. Interest rates at Upstart range from Upstart Personal Loans APR. That’s comparable to LendingClub’s APR range of Personal Loans and Avant’s APR range of Avant Personal Loans. 

Pros and cons of Upstart personal loans

Pros

Approval isn’t dependent solely on credit scores. For people who have struggled with credit in the past, Upstart will factor in a few other pieces of information for a better shot at approval.

Low credit score requirements. While Upstart does consider factors other than credit scores, it also has a low minimum credit score requirement at 600.  

Get your loan quickly. You may be able to get your loan on the day after you apply with Upstart.

Small loans are available. Upstart offers loans with a minimum loan amount of $1,000. Many competing lenders start their minimum loan amount higher.

Cons

Only 3-year and 5-year terms to repay. While other lenders offer several options on how long you’ll have to repay, Upstart only offers three-year and five-year terms. This choice could be impractical for borrowers on either extreme of the borrowing scale. However, there is no prepayment penalty, so you can pay your loan off at any time without a fee. 

Potential for high origination fees. Upstart’s personal loans can have origination fees up to 8%. Compared to competing lenders, this is a very high maximum — similar lenders Avant and LendingClub top fees at 4.75% and 6%, respectively. 

How Upstart personal loans work

Upstart Personal Loans offers unsecured personal loans, which are loans that don’t require any collateral, such as a house or car. These personal loans can be used for a variety of purposes and often have solid interest rates. 

You can use an Upstart personal loan for many purposes, like debt consolidation and moving expenses, but check with the lender to see if your expense qualifies for a loan.

One of Upstart’s main distinctions is its underwriting process, which is the task of deciding who gets a loan and how much to charge in interest. Like any lender, Upstart considers credit scores as part of the process. But it also considers employment history and education history, such as where you went to school and your area of study.

While this could be an advantage for people with lots of college experience, it may work against borrowers without that experience.

If you accept your loan by 5 p.m. ET, Upstart will deposit loan funds into your designated bank account on the next business day. It may take a little longer if you’re using funds for education purposes or to pay off your credit card. 

Email or call customer support Monday through Sunday, 9:00 a.m. to 8:00 p.m. ET.

What credit score do you need to qualify for an Upstart personal loan?

With Upstart Personal Loans, you’ll need to have a minimum credit score of 600 to qualify for a loan. But remember that the lower your credit score, the higher your interest rate will be.

If you need to access your credit report, you can get it at no cost from any of the three major credit bureaus on annualcreditreport.com weekly through April 20, 2022. This report will give you information about your payment and credit history — though it won’t provide you with your credit score. Looking over your credit report can help you spot errors and find areas for improvement.

You can get your score for free on your credit card statement or online account. You can also buy it from a credit reporting agency.

Is Upstart trustworthy?

Upstart Personal Loans is a Better Business Bureau-accredited company, and the BBB, non-profit organization focused on consumer protection and trust, gives the company a A+ rating. The BBB evaluates companies by analyzing a business’ responses to consumer complaints, honesty in advertising, and clarity about business practices. 

Upstart does not have any recent controversies. Due to its solid history and great BBB rating, you may consider using Upstart as your personal loan provider.

However, BBB scores don’t guarantee you’ll have a good relationship with the company and are merely a starting point on your search for a personal loan provider. 

How Upstart personal loans compare

Min. credit score

600

Min. credit score

Unspecified

Min. credit score

600

APR

Upstart Personal Loans

APR

Personal Loans

APR

Avant Personal Loans

Origination fee?

Yes

Origination fee?

Yes

Origination fee?

No*

Upstart Personal Loans

Personal Loans

Avant Personal Loans

*While Avant does not charge an origination fee, it does charge an administration fee of up to 4.75%.

Both Avant and Upstart allow borrowers with poor credit to get approved. For borrowers who meet Upstart’s minimum credit score requirement of 600, this lender could have an advantage with a wider range of interest rates and higher loan amounts. 

While Upstart has a clearly defined minimum credit score of 600 to apply for a loan, LendingClub is a little vaguer on requirements. Upstart has lower starting interest rates, but LendingClub has lower origination fees.

Upstart offers loans of up to $50,000, while Avant’s loans top out at $35,000. Interest rates start lower at Upstart, ranging from 7.86% to 35.99% APR, as opposed to Avant’s interest rates ranging from 9.95% to 35.99%.

However, Avant’s maximum origination fee is lower than Upstart’s, topping out at 4.75% as opposed to Upstart’s maximum of 8%. 

 

Read the original article on Business Insider

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