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Credit bureaus’ core operations have changed little since the 1980s, despite major advances in technology. With artificial intelligence now available, the opportunity to upgrade how lenders assess borrowers has become difficult to ignore—though only one company appears to have emerged as a dominant force in this approach.
For decades, credit bureaus Equifax, Experian, and TransUnion dominated the industry. Upstart, a relatively young company, is now disrupting credit scoring by using artificial intelligence to evaluate an individual’s creditworthiness.
Upstart’s model still incorporates traditional factors such as income, payment history, and existing debts. However, it also considers more than 2,500 variables about a potential borrower, aiming to produce a more accurate view of the likelihood of loan repayment.
The company says this approach enables 43% more approvals without additional defaults. Upstart’s technology has been particularly well received by automobile dealers, and it can also be used across other lending types, including home equity loans.
Since launching in 2012 through the end of last year, Upstart originated more than 5 million loans totaling over $50 billion through more than 100 lending partners. Nearly 1.5 million of those loans, worth $11 billion, were originated just last year.
While these figures may appear modest relative to the overall U.S. lending market, the Federal Reserve reports that American households owed $18.8 trillion as of the end of last year. Of that total, $1.7 trillion was in automobile loans, and more than another $400 billion was in home equity loans.
For investors, the focus is less on current scale versus competitors and more on growth trajectory. Upstart reported that last year’s total loan originations rose 115% year over year, driving revenue up 64% to $1 billion.
Profitability has also improved. Last year, Upstart recorded net income of just over $54 million, reversing a 2024 net loss of $128 million.
The company’s growth this year is expected to be slower, partly due to tougher year-over-year comparisons and partly due to economic headwinds. Even so, Upstart is described as firmly profitable and increasingly so.
At the time of the report, Upstart was priced at less than 10 times next year’s anticipated per-share profit of around $3.20, suggesting potential for gains between now and then.
The largest credit bureaus are pushing back with their own AI-related offerings. For example, Equifax offers AI-powered OneScore, which includes automation and self-service features similar to Upstart’s technology.
However, the report argues that Upstart has a head start over competing offerings, including the advantage of being built from the ground up to perform the specific task it is now executing. It also notes that Experian, TransUnion, and Equifax are still managing legacy businesses that are becoming less relevant in the modern lending environment.
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