Upstart Personal Loans: 2023 Review

Upstart differentiates itself from other online lenders with its underwriting model. The company uses artificial intelligence and nontraditional data — like college education, job history and residence — to qualify borrowers. More traditional lenders, like banks, focus almost exclusively on a borrower's credit report, debts, income and assets.

The company says its underwriting model helps younger applicants and those with thin credit histories qualify for a loan.

Where Upstart stands out

Fast funding: Upstart says borrowers can pre-qualify to see their rate in five minutes and should expect approval to take one business day. The company says the majority of its loans are funded one business day after a borrower signs a loan agreement.

If you’re prompt about sending paperwork, you can expect the whole process to take about two business days.

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.

» MORE: Talkfinance's picks for best bad-credit loans

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 the original due date, though, and the 15-day grace period for late fees applies to the 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 a late fee.

» MORE: Upstart auto refinance loan review

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

Alternative data use: In 2019, the Consumer Financial 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 with a traditional credit model, and applicants younger than 25 were 32% more likely to be approved.

Lenders that use data like college major and work history in borrower evaluations — as Upstart does — say it gives them better insight into a borrower's financial reality. But consumer advocates say it could reinforce existing racial and economic disparities.

» MORE: Learn about alternative data and personal loans

Where Upstart falls short

Limited repayment terms: Borrowers can choose a three- or five-year repayment term. Those same terms are offered by a few other online lenders, but they’re inflexible compared with lenders with as many as five or six repayment term options. The more repayment terms you have to choose from, the more control you have over monthly payments and overall interest costs.

Origination fee: Some lenders that use Upstart’s online lending platform charge an origination fee, which isn’t uncommon with personal loans, but the fee cuts into your total loan amount. Upstart’s fee can range from 0% to 8% of the loan amount.

No mobile app to manage a loan: Some online lenders have mobile apps where borrowers can make loan payments, view their payment history and see their latest credit score. Upstart doesn’t offer these features.

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 offers unsecured loans only.

» COMPARE: Lenders that offer joint, co-signed 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. address where the 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 three-year, $12,000 loan with a 23.4% APR would cost $467 in monthly payments. A borrower would pay $4,812 in total interest on that loan.