ZestFinance Is Providing Loans For Middle Class-Americans Denied By Banks

A finance tech company thinks machine learning can change the way loans are issued.

ZestFinance Is Providing Loans For Middle Class-Americans Denied By Banks
[Photo: Flickr user FamZoo Staff]

A data-centric financial tech company is now trying predictive analytics in a new realm: “near-prime” lending for customers with credit records that are not quite good enough for conventional bank loans.

ZestFinance’s new Basix product offers three-year loans of $3,000-$5,000 to customers in five states. Basix loans have high fixed annual percentage rates that range from 26% to 36%, and are intended for customers who have difficulty securing loans through traditional means due to bad credit.

ZestFinance applies machine learning techniques to a wide variety of data sources, allowing the company to predict how likely an individual is to repay a loan; the company also offers the technology to other lenders as an additional product.

“Basix will serve regular, hard-working people whose credit scores are just below levels that would allow them to qualify for a bank loan—tens of millions of Americans,” CEO Douglas Merrill said in a statement. “Our customers are middle-class Americans who have insufficient credit histories or have weathered a financially draining life event and are building or rebuilding their credit.”

This is the company’s second high-profile rollout in a month: Several weeks ago, ZestFinance debuted a consumer credit score service in China, where credit histories are more difficult to come by.

[via VentureBeat]

About the author

Based in sunny Los Angeles, Neal Ungerleider covers science and technology for Fast Company. He also works as a consultant, writes books, and does other things.

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