Today the Consumer Financial Protection Bureau (CFPB), one of our nation’s leading consumer regulatory agencies, issued a blog post about Upstart, An update on credit access and the Bureau’s first No-Action Letter.
In 2017, we received the first No-Action Letter from the CFPB regarding our use of AI and machine learning methods for credit underwriting. According to the CFPB, Upstart’s AI model approves 27% more borrowers than traditional lending models with 16% lower average APRs for approved loans. The CFPB also recognized that Upstart’s model approved almost twice as many consumers with FICO scores from 620 to 660 compared to a traditional model. We look forward to continuing our work with the CFPB to measure the impact of our underwriting models on a regular basis.
Last week, our CEO and Co-Founder, Dave Girouard, testified in Congress in front of the House Financial Services Committee on the topic of alternative data in credit underwriting. He shared additional perspective on the importance of expanding access to credit by using alternative data, artificial intelligence, and machine learning algorithms to determine a borrower’s creditworthiness.