I once worked in an organization whose CEO repeated in 90% of meetings he attended, “People don’t want auto loans; they want cars.” He also loved making exceptions at the front-line, lending on character over credit score alone.
Upstart reminds me of that CEO and his mantra in two ways. First, Upstart focuses on what a borrower wants to do with the funds before focusing on the loan itself. Second, Upstart focuses on a borrower’s potential in addition to past.
If you remember from the first day of lending school, Character is first among the “Four C’s of Credit”.
Sadly, consumers have come to believe banks and credit unions only measure said character with a silly three digit number ranging somewhere between 300 and 850.
Kudos to Upstart for taking an approach that acknowledges consumers deserve more than the standard model and relies on data to incorporate potential into the credit decision. Its message stands out distinctly when lined up next to its competitors (psssst… that’s you).