Upstart Bad Credit Loan Review

Upstart is an online lending marketplace that was founded by ex-googlers back in 2012 in California. When it was launched, Upstart offered an Income Share Agreement Product (ISA) that helped individuals to raise money against a percentage of their future income. Since then, the company moved away from that offering toward personal loans.

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    As the first lending platform to leverage AI/ML Upstart provides 3 to 5-year fixed-rate interest loans to high-quality borrowers. Upstart loans are available for several purposes, including weddings, moving house, credit card, and debt consolidation, home improvement, college tuition, and medical costs.

    Upstart is based on a quick loan system that evaluates the borrowers’ past as much as their future. They look at non-traditional variables, such as having regular income and promising financial prospects.

    Upstart provides fast funding opportunities for those with slim credit histories against a share of their future earnings. Loans range from $1,000 - $50,000, and funds can be available to you as fast as one business day after your application is approved. The exception to this is student loans, which can take up to 3 business days.

    Upstart also offers credit card consolidation, a solution to pay off credit card debt. This works by taking on a new loan at a fixed interest rate, ideally lower than those variable rates on your cards. Once your cards are debt-free, you are left with one monthly payment at a fixed rate. This enables you to pay off your debt much faster.

    Beyond its online lending platform, Upstart provides "Software-as-a-Service" technology to banks and credit unions, among others. Upstart has an overall good reputation across the web, holding an A+ Better Business Bureau rating and good reviews on several sites that monitor lending services.

    Upstart Financial Terms in a Glimpse

    Loan Amounts$1,000 - $50,000
    Term Length3-5 years
    Loan RatesEst. APR 5.69-35.99%
    Min Credit Score620
    Better Business Bureau RatingA+
    Time to Funding1-3 business days

    Upstart Highlights

    Upstart has many unique qualities as a lender, and many of those could make them the right choice for your financial requirements. Check out the following details to understand whether Upstart can help you with your money issues.

    Prequalify With Soft Credit Pull

    Through Upstart's website, you can fill in an application to prequalify for a loan. This will trigger a soft credit inquiry that won't harm your credit score.

    The information required to prequalify and check estimated loan terms is:

    • Loan amount needed and intended use
    • Full name, address, contact details, and date of birth
    • Level of education
    • Source(s) of income (that you can provide proof of)
    • Savings, checking/investment account balances
    • Loan activity in recent years

    High Debt to Income Ratio Allowed

    Upstart allows a max debt-to-income ratio of 45%, which is mostly sustained by the qualifications of its borrowers. According to their website, more than 77% of its clients are college-educated, with an average credit score of 688 and an average income of around $80,000 annually. This is quite high for those of us with poor credit and may make Upstart less of an option.

    Line of Credit

    Upstart's out of the curve system, based on a non-traditional evaluation of applicants, can give you access to credit lines that would be harder to obtain otherwise. Recently, they started working with individuals beyond specific education requirements, assessing their overall qualifications and their prospects.

    In case you need a financial boost to pay for your wedding or refurbish your home, Upstart is an excellent opportunity to check for credit options if you are short on credit history but can prove a sustainable source of income.

    Credit Health Tools

    Considering that most health insurance doesn’t cover all health care costs, Upstart offers medical loans that can be used to cover the gaps. Such credits can be applied to unexpected hospital bills or specific medical treatments and elective procedures.

    Another option that Upstart offers is to consolidate existing medical loans into one personal loan.

    The following procedures are an example of what Upstart medical loans can be used for:

    • Hearing Aid
    • Fertility treatments (IVF/in vitro fertilization)
    • Vision Care
    • Cosmetic / Plastic surgery
    • Dental Care
    • Hair loss/hair replacement
    • Bariatric Procedures, Weight loss

    Hardship Programs

    In case of economic hardship, such as losing your job, borrowers can suspend monthly payments until an agreed date, or a time when the situation has been resolved. This is one factor that makes Upstart stand out against most of the competition.

    No Prepayment Penalty

    As for prepayment fees, Upstart allows its borrowers to pay off a loan early without any penalties. This sort of flexibility can come in handy if you wish to clear your debt before the loan term is finished. It can also save you a lot of money in interest payments.

    Unsecured Loans

    Upstart does not require any collateral to be placed against the loan amount in the event of payment failure. That means that they will not take any of your possessions or valuables if you default on the loan agreement.

    Upstart Fees

    • Prepayment fee: None
    • Origination fee: 0.0% - 8.0%.
    • Late fee: 5% of the past due amount or $15, whichever is higher.

    How to Qualify

    The application process is tailor-made for each borrower, taking into consideration the factors mentioned earlier.

    To apply for an Upstart loan, you can fill out the application on their website. Enter the amount you would like to borrow and provide your education level, credit score, job history, and source of income. Upon completion, you can see an estimated rate for the loan as initial guidance.

    If you have a long enough credit history, Upstart requires a score of 620 minimum and a clean record with no bankruptcies or defaulted loans. You need to have less than six reference checks on your record, excluding student loans, mortgages, and car loans.

    Be aware that permanent residency in specific states might affect your eligibility as Upstart’s minimum loan amounts vary in different states. This may have an impact on approval when applying for smaller loans.

    For reference, here are some Upstart minimum loan amounts in various states:

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

    Upstart doesn't offer personal loans in West Virginia, or Iowa and co-signers aren't accepted. This can make it more of a challenge for those of us with poor credit ratings. You can find a full list of details on their website.

    The Bottom Line

    Upstart can be a reliable partner for young people with a promising financial future, even with little to no credit history. Upstart can also be useful for people who have a good source of income, yet a short credit history or a low score. If you consider yourself such an individual, you will get competitive terms through their unique lending platform.

    Although origination fees and late payment fees are relatively standard within the lending industry, applicants should be fully aware of them. The fact that the loans are credited within a business day of approval makes Upstart unsecured personal loans a fantastic option if you need funding fast.

    With a vast loan portfolio, positive customer reviews, and flexible eligibility based on non- traditional evaluation of applicants, Upstart is worth looking into. If you fit their minimum requirements, you could find what you need to help you plan for the future and meet your financial needs.