Having a college degree is becoming more important than ever. It’s not only important for career growth and enhancements, but it could also help you get a loan.
CEO of Upstart, Dave Girouard, is introducing a more sophisticated and more modern risk engine to foster credit decisions.
The former employee at Google and Apple said modern technology has made it possible for financial institutions to approach credit lending in another way. According to him, FICO is becoming outdated because of the way credit works now. He is looking into the idea of deploying modern data science to get better consumer outcomes.
Loan assessment alternatives
Girouard said the company is looking to provide an alternative loan assessment method where young individuals could access loans without the usual credit experience attached. According to him, in the present loan assessment method, the lenders depend largely on the information related to the credit experience of the customer.
He added that it’s usually very difficult for 20-year-olds and other young people to get loan access because of the usual scrutiny. But with the innovative loan assessment approach, there may be other information they can explore to give the company more confidence when accessing the loan repayment capacity of the individual.
College education is one of the main data scores
The approach could consider their college degrees in the assessment. Lending banks and financial institutions have always looked at the individual’s education in their assessment of loan credibility. But Upstart is planning to make it one of the main score points.
According to Girouard, it will make Upstart more interesting to those who are serious about college outcomes. If the loan is added to one of the benefits of having a college degree, it could induce more seriousness in current college students and intending ones.
Also, the college degree may not singlehandedly determine whether an individual is loan worthy or not. But it will surely improve their chances of getting a loan, he said.
The Upstart model considers other things too when accessing the candidate’s eligibility. But, according to the CEO, it will come in very handy when accessing the overall eligibility of the individual.
Where they went to school and what they studied has a big influence on their salary. In the same way, it could also influence whether they get a loan or not.
Girouard also said that there’s already enough data on the importance of education, as those with higher degreed usually have experience lesser unemployment debacles. There are lots of research that prove college degree is very vital to the disbursement of loans.
Upstart wants to impact more on economic outcomes
But he also stated that their loan approach does not mean Ivy League elites would have it pretty easy to obtain loans from the firm. Girouard stated that Upstart only has a 1% provision for its loans to Ivy League graduates. He followed his statement up by saying the company actually cares more about economic outcomes, not about prestige.