You applied for an Upstart loan and was denied (even though you may have been pre-approved).
The purpose of this article is to explain how Upstart works, what you can do if you are denied and still need a debt consolidation loan and 3 alternatives options to help you get rid of your debt cheaper, easier and faster.
What is Upstart?
Upstart is a technologically driven credit lender. Upstart uses an Artificial Intelligence lending platform to help make credit more accessible with less risk for lenders. They also claim to not use outdated methods to determine eligibility for loans, noting that most lenders solely look at things like FICO scores instead of the holistic borrowing history of an individual. Because of this, individuals with lower credit scores tend to be unable to create better scores for themselves. This is just one of the issues that Upstart is fighting against. With founders that have backgrounds at Google, they claim to be one of the best, most forward-thinking lending agencies in the modern era. With this in mind, what is the reason you might want to apply for a loan from Upstart? Let’s take a closer look.
Why Would I Apply For An Upstart Loan?
As mentioned earlier, Upstart has a different approach to determining who to loan money to and how much to loan. There are a variety of factors Upstart looks at when deciding whether a candidate is able to be given a loan. In fact, you can have a credit score as low as 300 (the lowest your score can go) and still be approved based on factors like income, payment history, and more. At other lending institutions, the minimum credit score needed tends to be between 580-630. Because of this, Upstart may be a good option for you if your credit history isn’t robust, but you have the funds or source of income to afford a loan.
Other instances you may want to use Upstart include some of their special offerings. While they advertise that they assist in paying off credit cards, consolidating debt, and refinancing car payments, all options on their first page take you through a questionnaire for loan amounts. So while you may think you are signing up for a program, what you are really doing is taking out a loan. Be cautious of this if you are not looking for just a loan. But what happens if you are denied a loan that you want or need?
What Should I Do If My Upstart Loan Is Denied?
If your loan is denied, there are a few things that you can do. First, try to pinpoint why the loan was denied. In most cases, it appears as though Upstart gives a reason for denial. If you believe that you have been denied incorrectly (because there was either an error in your report or verification of information), you can submit corrected documentation that should fix the situation. If this is your situation, you would file an adverse action notice. This simply lets Upstart know that there is information that you have had corrected and for them to review your application once again.
What If Upstart Said I Was Pre-Approved?
Sometimes companies send out mailers or emails that give you an estimated loan amount that you are pre-approved for. However, even when you are “pre-approved,” you will still have to fill out an application. When filling out an application, any change in current financial status will be denoted. Per Upstarts website, any of the following changes could disqualify you from the loan you were pre-approved for:
- Has your credit score dropped more than 25 points
- If your monthly debt obligations increased by more than 3% or $200 per month
- If you have any debt payments that are more than 30 days delinquent
- Is there a new account listed on your credit report
Should any of the above be true, then you will no longer qualify for the loan you were originally pre-approved for.
Can I Reapply for an Upstart loan if I was denied?
Yes, you can, but there are certain things to consider.
If you happened to have applied for a $50,000 loan (their maximum amount) and were denied, consider applying for something smaller! Because lenders have to keep their risk low, big loans are reserved for those who are almost guaranteed to pay them back. So if you are initially denied, consider a smaller, more reasonable amount.
If you apply for a smaller loan and are still denied, it is likely you will not receive anything from Upstart. However, when applying for a loan, you will be creating an account simultaneously. Per the website, if anything in your situation changes, you are encouraged to reapply for a loan. This could give you the opportunity to obtain a loan later. However, sometimes you need help immediately, so what else can you do?
Do I Have Any Other Options?
Luckily, there are some other options you have, depending on why you need a loan. We’ll break down your options based on the reasons you might need a loan.
Credit Debt Consolidation
While the fastest way to pay off all your credit cards at once may be to take out a large loan, this can often lead to compounded interest that raises your total payment. Instead, consider working with a debt consolidation program. These programs allow you to bundle your payments into one, without adding an excessive additional interest payment on top. Look specifically for programs, not loans.
Refinancing a Car
If you are looking to trade out your current auto loan with an auto loan at a better rate, consider shopping around! There are dozens of lenders and banks that will help you refinance. Depending on why you were denied a loan, there is a chance it could be difficult, but still look around. The worst-case scenario is you sell your car and purchase a cheaper car with the money you make on the old car.
Consider the purpose of the personal loan. Is it necessary to get you through a tough patch? Or is it for non-essential luxuries? Regardless of what it’s for, if you are looking for an influx of cash, there are a couple of things you could do. The first is getting a second job. Whether that is a side business you start or a part-time job you do in your free time, there are plenty of ways to earn more. You could also sell things you already own. From little things around the house to extra vehicles, get creative! You can definitely bring in some cash selling things you own.
Regardless of the reason, if you need a loan but are worried your credit score may not cut it, Upstart may be a great place to apply. However, if you are denied, know that you still have options! If you’d like to talk about those options, give Ascend a call! We’d love to talk about what your next steps should be.