UPST News Release

Upstart Joins Office of the Comptroller of the Currency’s Project REACh to Promote Greater Access to Credit for Underserved Populations
November 4, 2021 at 9:00 AM EDT

SAN MATEO, Calif.–(BUSINESS WIRE)–Nov. 4, 2021-- Upstart (NASDAQ: UPST), a leading artificial intelligence (AI) lending platform, today announced it has joined the Office of the Comptroller of the Currency’s (OCC) Project REACh (Roundtable for Economic Access and Change) to promote financial inclusion through greater access to credit and capital. Since joining Project REACh, Upstart has been focused on the workstream to revitalize small minority depository institutions.

Read the rest at:…


Something I noted from the press release this morning:

“For 2020, Upstart’s model approved 30% more Black borrowers than a traditional model and provided 11% lower interest rates than a traditional model.”

But I recall from a previous UPST blog post:
“2019 results showed that Upstart’s model increased approval rates for African-American applicants by more than 45% with 21% lower APRs compared to a traditional credit model.”

I wonder if part of the reason for the decrease is due to “forced” changes thanks to mislead claims by SBPC last year and congress jumping on that bandwagon.

That led to the whole Relman Colfax report in April 2021 (by the way they have given no update last month, even though they said they would for October).

All my speculation though. But interesting.

Here were the changes implemented, per Relman Colfax:…

“In responses to those conversations, as well as the congressional inquiry, Upstart made certain changes to how its underwriting model utilized educational data. Most notably, it abolished the use of average incoming SAT and ACT scores to group education institutions in its underwriting model. While Upstart’s model continues to incorporate information about the educational institution attended, it switched to grouping schools based on average post- graduation income. Upstart also established a “normalization” process for “Minority Serving Institutions” (“MSIs”)—which Upstart defines as schools where 80 percent or more of the student body are members of the same racial demographic group.103 Under that process, Upstart normalized MSIs as a group to have equal graduate incomes as non-MSIs by calculating and using the distance, as a percentage, between a school’s graduate incomes and its respective school group average (i.e., MSIs, non-MSIs). This process results in MSIs and non-MSIs being on average equal. Put another way, above average MSIs (in terms of graduate income) are treated above average overall by as much as they are above the MSI average. Any decisioning, including tranching, is then performed on this normalized information.”


I loved this news and would note a couple of additional things.

  1. To jonwayne’s point about the percentages of Black borrowers changing from 2019 to 2020, I wonder if that is explained at least in part by their footnote to that paragraph which states:

“As of December 31, 2020, and based on a comparison between the Upstart model and a traditional credit model. Upstart does not collect demographic data on borrowers. Upstart uses standard industry methodology to estimate borrower demographic status to conduct access-to-credit analysis comparing Upstart to traditional credit model outcomes.”

December 1, 2020 is when they reached an agreement with the NAACP and the Student Borrower Protection Center to review fair lending practices.…. The letter highlighting their need to change came at the end of July, 2020.….

Knowing how pro-active UPST management is, my hunch is that they actually stopped collecting the demographic data sometime in Q3 of 2020. That particular data point would have been very easy to identify and likely the NAACP pointed it out right away as an issue. If that’s correct, it could explain the decline as they would be using a much more general metric for determining demographics.

  1. The following line also struck me: “Less than half of American adults can access prime credit, despite the fact that four in five Americans have never defaulted on an obligation.”

This speaks to the enormous TAM they are going after, as well as the fact that they are not primarily looking for sub-prime borrowers, but rather prime borrowers who have never been identified as such for a whole host of reasons. Earlier in the press release they point out that almost 50 million Americans have no credit score at all.

Great business that goes the extra mile to also do good and promote what is fair and just, which also actually expands their bottom line. Truly exceptional.

30% UPST