Upstart Holdings, a fintech lender that offers personal loans underwritten with the help of machine learning-based credit-scoring models, has announced they will no longer carry loans on its balance sheet that other financial institutions aren’t interested in buying. Sanjay Datta, Upstart’s CFO, said the company would likely reduce its lending volume rather than temporarily place loans on its balance sheet if it saw weak demand for loans from investors. Small banks and credit unions take around a fifth of the loans that the company arranges. Upstart informed investors that it opted to place $100 to $150 million in loans on its balance sheet for the time being. In determining a borrower’s ability to repay a loan, Upstart employs machine-learning algorithms that take into account over 1,500 criteria. Upstart claims to be able to predict prospective loan losses more precisely than traditional credit scores.
Fintech Lender Upstart Says It Won’t Keep Excess Loans on Balance Sheet