In a Nutshell: LendUp is a California-based provider of credit cards and loans. LendUp’s L and Arrow credit cards are highly rated on Credit Karma and feature transparent pricing and terms. LendUp’s cards are giving those with subprime credit scores more favorable terms than most of the fee-harvester cards they are typically eligible for. Over time, LendUp loans allow its borrowers to earn points toward their next loan to access more money and lower rates where available. Points are earned by responsible borrowing behavior, like paying your loan on time and watching LendUp’s credit education videos. LendUp is fixing what’s broken with payday lending through transparent products that provide a path to financial health over time without charging hidden fees or rollovers. Both LendUp’s credit cards and loans are paired with free online financial education that teaches the basics of the 13 financial tenants, to help customers get on a path to better financial health now and in the long term.
Payday loans have always been frowned upon in the lending industry. The “fast cash and no credit check” promise offered by traditional payday lenders lure in 12 million Americans each year, according to the annual Pew Charitable Trusts Report. The high costs and fees associated with payday loans make them difficult to pay off, leading most borrowers into short-term debt traps.
LendUp is changing what’s wrong with payday loans — especially for people with less-than-perfect credit. As the first lender to provide an improved alternative to payday loans that actually advocates credit education and repair, LendUp is shifting the way the industry views payday lending.
In fact, LendUp has saved customers nearly $200 million in interest and fees versus traditional small-dollar lenders.
We spoke with LendUp’s Credit and Analytics Manager, Emma Kelsey, to learn more about how LendUp is disrupting the $350 billion subprime financial services industry with the first-of-its-kind, consumer-friendly credit cards and LendUp Ladder business model, and how it helps its borrowers build their credit and improve their financial knowledge.
The LendUp L Card is a Subprime Standout
While most people know LendUp as an ideal alternative to traditional payday loans, LendUp has partnered with Beneficial State Bank and TAB Bank for its new L and Arrow credit cards, which are invitation-only for the time being
“Right now, consumers can apply for our credit card if they receive an offer in the mail or through one of our partners,” Kelsey said. “You have to be prequalified in order to apply at this time, but we will open up direct traffic in the future.”
The L and Arrow cards’ advantages are immediately apparent, especially for anyone who has ever shopped for credit cards that cater to those with credit issues.
“We’re operating in the subprime space, where most consumers only have access to fee-harvester cards,” Kelsey said. “These are high-priced cards that lack transparency in terms of how much a customer will pay over time. A lot of our competitors have account-opening fees, over-limit fees, and really exorbitant late fees. Those are things that we don’t do.”
LendUp believes that people with past credit problems need a break more than anyone. With this in mind, the L and Arrow cards charge no account-opening fees and no over-limit fees. Plus, late fees are much more reasonable (no more than $25) than competing cards. Another differentiator is that LendUp actually encourages cardholders to make more than their minimum payments, which helps them clear debt faster.
“We’re trying to work with customers, whereas a lot of the offerings out there are working against customers,” Kelsey said. “There’s a big opportunity to disrupt the subprime market and provide a much better option. This card is about providing that prime-level experience, even if you don’t have a prime credit score.”
Kelsey told us early customer feedback on the L and Arrow cards has been tremendously positive.
“Our customers have responded really well to this credit card offering,” she said. “We have a nearly 5-out-of-5 rating on Credit Karma. We’re excited to have an offering that so many consumers need and are responding to.”
Earn Points to Climb the LendUp Ladder and Access More Money and Lower Rates Over Time
“One of the things that makes LendUp different is our points system on our loans, which help them climb the credit ladder and get access to more money at lower rates, all while learning about financial health. Customers earn points a number of ways, including paying back loans or taking our free credit education courses. Points translate into status levels as customers gain access to Silver, then Gold, then Platinum, then Prime-level loans,” Kelsey explained.
LendUp has provided 2 million free education courses. And the points system Kelsey is referring to is what’s called the LendUp Ladder; as you earn points, you could “climb” the Ladder to new levels of loans, and eventually reach LendUp loans that can help build your credit history. Earn your first 125 points when you begin your first LendUp loan.
“Each level means access to more money, at lower rates, over longer periods of time. At our Platinum and Prime levels, we can report loan payments to credit bureaus, giving our customers the chance to build their credit histories,” she said.
LendUp views consumers as more than their credit scores and cares that people receiving loans can afford to pay them back. LendUp does not just issue the loan, receive an origination fee, and then pass the loan to somebody else like online loan “marketplace lenders” do. LendUp’s established relationships with the credit bureaus are what give you the opportunity to build your credit history through a qualifying LendUp loan.
“I love the ladder feature. This is the only payday service I’ve used and the only one I will use because it is easy, secure, and fast.” — Brittani W., LendUp Client
As Kelsey explained, the ladder works when customers make their loan payments on time. For each loan you repay on time, you’ll earn 1000 points. After qualifying for lower interest rate installment loans, LendUp will report on-time payments to credit bureaus so they can become a part of your credit history, helping to improve your credit.
She said that most customers begin at the Silver loan level, and eventually earn access to the credit-building loans.
“It looks different in each of the states in which we operate, but typically first-time customers are borrowing between $100 and $250 for between a week and a month,” she said.
The amount of points necessary to move to the next loan level varies by state and is not available in all states.
Know if You’re Approved for a LendUp Product Instantly
LendUp has originated nearly 5 million loans and hundreds of thousands of cards. And, when you apply with LendUp, you always get an instant decision.
The company’s unique underwriting process looks at hundreds of factors to determine approval, and is even able to lend to those with past bankruptcies on their credit reports.
“Our underwriting process can take into account hundreds of FCRA compliant data points to evaluate a potential borrower’s ability and willingness to repay,” Kelsey said. “We have approved people with damaged credit, including bankruptcies in the last seven years, as well as people without a lot of information on their traditional credit file,” she added.
Watch LendUp’s Educational Videos to Better Understand Your Finances & Move Up the Ladder
LendUp offers 13 educational videos — all between two and five minutes each — that help its customers learn about their finances and credit, all while earning points toward their next LendUp loan.
“They cover a variety of topics from understanding your credit report to how to improve your credit score to how to protect your identity online. Our goal is to provide valuable content in an easily digestible format, and then reward customers who take courses by moving them up the Ladder faster,” Kelsey said.
For each course you finish, you’ll earn 125 points. Once you complete your first six courses, you’ll receive a 250-point bonus.
5 Additional Benefits of LendUp Cards and Loans
Aside from the opportunity to build your credit, LendUp offers additional benefits for its customers:
- Instant Decision: The application takes just five minutes, and you’ll know right away whether you’re approved.
- No Hidden Fees: Terms and conditions are transparent. LendUp wants its customers to be “informed, not confused.”
- Personal Dashboard: 24/7 online access to check your card or loan status.
- No Loan Rollovers: LendUp works with its customers to ensure they’re never trapped in a vicious debt cycle.
- Top-Notch Customer Service: LendUp’s California-based team is willing to help via phone or email in both English and Spanish.
Hidden fees, rollovers, and the overall high cost of payday loans are why they’re so controversial in the first place — LendUp is removing the controversy from subprime credit products.
The Future & Product Expansion of LendUp
LendUp has helped hundreds of thousands of customers since its founding in 2012 and has saved them $200 million in fees and interest.
Kelsey told us LendUp is committed to doing more than providing the best possible financial products, with a recent push to work with nonprofits to improve financial health across the board. Its recent partnership with EARN is a great example of this in action.
“EARN is a nonprofit that gives consumers an incentive to save. We’re partnering with EARN to test ways to encourage our customers to save more and get on the path to better financial health,” she said.
LendUp products are able to provide relief to the 76% of Americans who are living paycheck-to-paycheck, with the opportunity to build credit in the long run. To see if LendUp products are right for you, visit its website.