Study Shows LendUp Borrowers Improve Credit Scores

One of LendUp’s guiding principles is “ladders not chutes” -- meaning customers who use our products end up in a better financial position than in which they started. While this has guided our company and our products, we struggled with the best way to measure this quantitatively.

While we intuitively believed the product design of the LendUp Ladder would benefit consumers’ financial health by offering expanded choices and the opportunity to have repayment behavior reported, we wanted conclusive data showing this to be the case. Through research using anonymized data from TransUnion, we were able to show the impact on credit scores of LendUp customers using our platinum and prime level products versus customers using similar types of products from other lenders*.


66% of Customers Improve Their Credit Score

The data we found are quite compelling, with the results showing that two-thirds of LendUp customers showed a credit score increase, and, more importantly, more LendUp customers showed an increase than those in the control group.

In the “moderate subprime” segment of VantageScore 3.0 credit scores ranging from 501-600, we see LendUp customers perform quite similarly to the control group, with approximately 62% in both groups seeing a credit score improvement and approximately 35% seeing a score decrease.

The difference becomes much more apparent in the “deep subprime” segment - those with VantageScore 3.0 credit scores ranging from 300-500. In this band, 77.33% of LendUp customers saw score improvements, versus 67.09% in the control group (a 10.24% delta between LendUp and control groups).

Fewer LendUp Borrowers Saw Score Decreases

Equally noteworthy is that fewer LendUp customers than control saw score decreases - 22.09% of LendUp customers in this credit band experienced score decreases, while 31.64% of customers in the control population experienced score decreases.

The findings remain largely consistent when looking at customers experiencing a material change in score, which we define here as a change of greater than 20 credit score points over the three month study period:


In the 501-600 credit band, LendUp customers outperformed the control group, with 31.70% seeing a greater than 20 point increase in their credit scores, while only 28.87% of those in the control group saw a similar increase. Material decreases in this credit band for the LendUp population and control population were comparable.

The difference is even more stark looking at the 300-500 credit band. There, 50% of LendUp customers saw an increase in their credit score of more than 20 points, whereas only 42.94% of the control population saw a comparable increase. LendUp customers also outperformed the control in those seeing a material decrease; only 11.63% of LendUp customers saw a greater than 20 point decrease in their credit score, while 19.35% of the control group saw a decrease this large.

LendUp Aligns Business Objectives with Customer Success

What this shows is that LendUp’s unique approach to small dollar lending combined with our advanced machine learning-based underwriting aligns customer success (on-time repayment) with business objectives, and results in improved customer health as measured by VantageScore 3.0 credit score.

And this is just the starting point. Within the existing LendUp Ladder product, we will continue to work with external research partners to understand what causes customer scores to improve or decline; this will allow us to better design products to meet our customers’ unique needs and to offer expanded credit education content around areas that are especially confusing or problematic for our customers.

As we continue building LendUp products, we will focus on offering more and better products to the underserved subprime and near-prime markets that our research suggests can help them improve their credit scores and overall financial well-being.

*Control group defined as an anonymized simple random sample of consumers who have taken out a loan similar to a LendUp product between October and December 2014. Changes in scores are measured from the end of December 2014 to the end of March 2015.

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