Real life example of limits of Credit Score

Over the last few months, many of us have followed UPST and learned many things. One of the main things I think we have all learned from listening to Dave Girouard is that Credit Score is a very bad way of accessing credit risk.

Last month I began the process of refinancing three of my rental properties to get a lower rate and pull out some cash. Here is some of my info:

High net worth
Never missed a payment of any kind in over 25 years
High income
Worked at the same job for over 20 years
Credit Score has been mostly over 750 for many years

Over the last few years I have constantly gotten credit card offers for 18 Months/Interest Free. So, I decided to play the game, and I took two of the deals. So, I basically told my wife (and told myself) to max out a certain credit card until we hit $30,000 (the credit limit). Then, just leave the money for 18 months (well, more like 14-15 months because it took 3-4 months to max it out). Then, after 18 months, I just pay the balance in free. Basically, its an interest free loan for 18 months.

This process increased my “utilization rate” on my credit score and dropped my Credit Score to around 725-730. The loan officer with the company I am refinancing told me that since my credit score is less than 750 I will have to pay and extra $1,500 in closing cost fees on each of my 3 properties I was going to refinance because I am now deemed a higher-risk to them. I said to him,“Let me get this straight. I have a high net worth. I have never missed any payment of any kind in 25 years and I have been with the same company for over 20 years. But, since I took an offer from a credit card company (which gave me the offer because I have excellent credit) to basically get an interest free loan on about $60,000 on 2 credit cards (which is a tiny percentage of my net worth) I am being viewed as a higher risk?” He replied with a simple,“Yes”

I guess my story is no different then the story Dave Girouard told about Paul Gu. He got a 1600 on SAT’s, graduated from a top Ivy league school but could not get a $10,000 loan because he didn’t have a credit history.

It just seems that a Credit Report has so many flaws and so many things wrong with it that the opportunity for UPST is just tremendous.


long UPST


I don’t think that is a valid point about UPST. Your case is just unique.
People usually maxing credit cards when they are really desperate due to some major life events. Most people know that 30%+ utilization (even on 0% APR) will decrease credit score and it will affect refinance rates. So, 100% utilization on $60k RC right before refinance is a red flag for lender. They don’t know your life situation, just a fact that you was in need for that credit before refinance.



I think his experience is par for the course and points out exactly why credit scores are so deficient. In fact, I would go so far as to say that the scoring system is rigged to give banks a chance to charge more. The credit score game is similar to charging overdraft fees. It is a fig leaf used by banks to pile on additional charges.

What is so great is that upstart turns the paradigm on its head and will probably result in changes across the entire banking system



My wife couldn’t get a loan when we were younger. She had an MBA, no debt, and a high income.

She had no credit history because she had just immigrated to the USA from France.

Remembering that experience made the decision to invest in UPST very easy for us.


Your points are all valid.

If you are interested in raising your credit score, sign up for a couple more credit cards.

You will take a short term hit for new lines of credit (about 3-6 months) but in the long term, your available credit line will help avoid this situation.