SAN MATEO, Calif., Dec. 11, 2019 /PRNewswire/ -- Upstart, the leading artificial intelligence (AI) lending platform, today announced a new feature enabling bank partners to pay off a borrower's credit cards directly.
Personal loans are the fastest growing category in consumer lending, and repayment of credit card debt is the most popular use of personal loans. This new option reduces the risk of personal lending for banks, while helping to break the cycle of credit card debt for consumers.
"Borrowers who pay off their credit card debt immediately are less likely to default," said Dave Girouard, Co-Founder and CEO, Upstart. "When you can reduce the risk of lending for banks while simultaneously helping consumers make the right financial decision, it's a win-win."
Direct payoff of credit cards offers the following benefits:
- Banks can benefit from lower default rates on personal loans
- Borrowers are incented to pay off their credit card debt to receive a lower rate
- Borrowers can improve their credit score by 45 points on average within three months*
Upstart's bank partner Cross River Bank is already seeing positive early results from this new feature. In fact, more than half of borrowers who were given the option to use direct credit card payoff took advantage of this new feature. One of the primary benefits to consumers will be the ability to realize a discount if they choose to pay off their cards directly. This feature will be available to all Upstart bank partners in 2020.
Personal loans, the fastest growing category in consumer lending, represents a huge growth opportunity for banks, as they embrace digital lending and AI in credit underwriting. Americans have surpassed more than $1 trillion in total credit card debt as of July 2019, which translates to a large potential opportunity for fixed-term personal loans. Banks interested in learning more about the Upstart platform can request a free demo.
Upstart is the leading AI lending platform partnering with banks to expand access to affordable credit with more than $5B in loans originated. By leveraging Upstart's AI platform, Upstart-powered banks can have higher approval rates and lower loss rates, while simultaneously delivering the exceptional digital-first lending experience their customers demand. More than two-thirds of Upstart loans are approved instantly and are fully automated. Upstart's patent-pending platform is the first to receive a no-action letter from the Consumer Financial Protection Bureau related to fair lending. Upstart was founded by ex-Googlers in 2012 and is based in San Mateo, California and Columbus, Ohio.
*This information is based off of actual borrowers as of 09/30/2019 who identified "credit card refinancing" as their primary use of funds and paid off at least 51% of their outstanding credit card debt within 3 months of taking out the loan. Out of these actual borrowers, some could have experienced an increase or decrease in their credit score. This information reflects the overall average change in credit score points experienced by this group of borrowers as identified above.