How Important Could Upstart's Auto Business Be by 2032?
Upstart (NASDAQ: UPST) has taken the lending industry by storm with a platform that helps make affordable credit available to more Americans. The company's product competes primarily with the FICO credit score, which, while historically critical to lenders, is a flawed method for determining a person's creditworthiness. As a study conducted by Upstart in 2019 found, 80% of Americans have never defaulted on a debt, yet only 50% of Americans have access to prime credit based on their FICO scores.
The flaws in those simple credit score formulas have left a broad swath of the U.S. population without access to credit at affordable interest rates.
Upstart is trying to change that. Its artificial intelligence platform considers more than 1,500 variables to make lending decisions on each individual borrower. This generates a more holistic view of creditworthiness. Primarily, its determination system has been used by its lender clients to make decisions about personal loans, but in April 2021, Upstart bought Prodigy -- an auto retail software company -- to accelerate its expansion into the auto loan niche. That looks to be a major opportunity for the fintech.
Source Fool.com
