People with bad or no credit are often forced to take loans with high interest rates or unfriendly terms, but Upstart.com wants to flip the script.
Billing itself as a "Kickstarter for college students," the company takes other future-looking factors into account besides a person's credit score, or FICO, to decide how likely it is that you'll repay.
They're sort of like the questions you might get asked by your partner's parents the first time you meet them: Where did you go to school? What did you study? How much will you make in the future? Is this a reliable career?
"We're in the business of seeing signals about a person that others don't see," said company founder Dave Girouard.
"FICO is inherently backward-looking, what you've done with credit in the past," he added. Whereas with Upstart, he said, "We like to view it as identifying someone's potential, where they're going."
Customers like Dave Collier, a programmer employed by Trinity University, have used Upstart to transition careers. He quit his job in the oil business, hard-hit since the price of crude has fallen, and signed up for programming classes. It seemed like a smart bet, but the tuition added $16,000 to his existing debt. Now he owed over $50,000.
Using Upstart he was able to consolidate $22,000 worth of credit card debt and reduce his interest rate from 19 percent to 7.5 percent, a savings of $5,510.
Some in the industry are skeptical, asking if the model could weather the next economic downturn.
"The jury's going to be out until we're in a recession-area environment and delinquencies and defaults go up, and that's where you can really see what form of lending was worth the risk and which was not," said Greg McBride, chief financial analyst at Bankrate.com.
But for now, borrowers are happy they're getting a new lease on life, at a discount rate.
"I'm going to buy a house sooner," said Collier. I'm going to get married sooner."
For more information, check out upstart.com.