[austenallred]

What's wrong with granting loans to people who have bad credit? What are they supposed to do if there's a shortfall or a car breaks down, pawn a wedding ring?

I used to work for LendUp. They're the most caring and altruistic people I've ever met. I mean that literally.

LendUp uses machine learning & data science to decision people with more granularity than a credit score, and can therefore approve much deeper than banks or credit card companies ever would. On top of that, as LendUp learns you're a reliable borrower, it will lower your interest rate as far as it can for you, give you more favorable terms, and even extend a credit card for those that qualify.

LendUp helps people improve their credit when almost no one else will lend to them, and has been shown in independent studies to both improve credit scores and decrease the costs of borrowing for subprime borrowers. These are folks for whom the only other option is payday loans or pawn shops if there's a shortfall, and LendUp uses tech to give them much better options.

It's a noble mission, and one I'm damn proud to have been a part of.

[sidlls]

What's wrong is the absurd fees they charge. The only difference I can see between them and payday lenders is the shabby facade of credibility they think they have by being a "tech" company. Nobody who has to scrabble for $250 for an emergency is in a position to drop a 25% vig on top of it in repayment.

[bmelton]

But if you lend to high-risk creditors, you have to have non-repayment built into the rate. As of the last time I saw an article on it, the rate of default for payday loans was something like 50%. High interest rates are there to absorb the risk.

[mixmastamyk]

(Don't know their expenses, however if they don't pay rent downtown they should be saving some money.)

High fees go hand in hand with the high risk they are taking of not being paid back. Everyone has to chip-in or the model doesn't work.

[austenallred]

What would you charge?

[jdminhbg]

> Nobody who has to scrabble for $250 for an emergency is in a position to drop a 25% vig on top of it in repayment.

How do you know?

[JetSpiegel]

> LendUp uses machine learning & data science

Stopped reading right there.

The landing page mentions "for people trying to build up credit history"

[austenallred]

You're assuming that the only type of data that exists is credit report data, which is wrong by several orders of magnitude.

[rickpmg]

Why would you stop reading? Credit scores are good, but not everyone (in the world) has them... cash economies, etc.

There was some startup that micro-loaned in poorer countries based on a person's cell phone info (ie, how many contacts, who they called the most, etc, etc).

[toomuchtodo]

> I used to work for LendUp. They're the most caring and altruistic people I've ever met. I mean that literally.

Well intentioned loan sharks are still loan sharks. LendUp is attempting to solve a manufactured problem.

People don't need payday loans, they need social issues fixed that trap them in a cycle of poverty. No VC money available for that though.

[austenallred]

If you know how to solve the problems of income volatility, low income, or high credit risk at scale, you should do that.