Latest news with #FICO
Yahoo
13 hours ago
- Business
- Yahoo
1 Amazing Artificial Intelligence (AI) Stock Down 88% You'll Wish You'd Bought on the Dip in 2025
Upstart developed a unique artificial intelligence (AI) algorithm that could make traditional loan assessment methods obsolete. Upstart CEO Dave Girouard thinks the world's $25 trillion in annual loan originations could be assessed entirely by AI within the next decade. Upstart is leading that revolution, and its stock looks very attractive at the current price. 10 stocks we like better than Upstart › Upstart Holdings (NASDAQ: UPST) developed an artificial intelligence (AI) algorithm to originate loans on behalf of banks and financial institutions, and it appears to be far more effective at determining the creditworthiness of potential borrowers than traditional assessment methods. Upstart stock has nearly doubled over the past year, but it remains 88% below its all-time high, which was set during the tech frenzy in 2021. Demand for loans plummeted when interest rates soared in 2022 and 2023, which dealt a blow to the company's financial performance. But earlier this month, Upstart reported its financial results for the first quarter of 2025 (ended March 31), and they revealed extremely strong -- and accelerating -- revenue growth. Its stock is starting to look like a bargain, so here's why investors might wish they had bought the dip when they look back on this moment in the future. Fair Isaac's FICO credit scoring system has been central to the banking industry's assessment methods for over three decades. It uses five key metrics to determine a potential borrower's creditworthiness, including their existing debts and their repayment history, but Upstart thinks it's outdated. AI makes it possible to analyze high volumes of data in a matter of seconds, enabling Upstart's algorithm to consider over 2,500 metrics on every applicant. As a result, the company says it produces a more accurate overview of a borrower's ability to repay their loan. It approves double the number of applications than traditional assessment methods, and at a much lower average interest rate, while maintaining the same risk profile. Inside a traditional bank, it would take a human assessor days, if not weeks, to manually analyze as much data as Upstart's AI algorithm. The company is slowly phasing humans out of the process entirely -- during the first quarter of 2025, it originated 240,706 loans in total, and a staggering 92% of those approvals were fully automated thanks to AI. The bulk of Upstart's originations are unsecured personal loans, but it has a growing presence in automotive loans and also in the home equity line of credit (HELOC) segment. At the company's "AI Day 2025" earlier this month, CEO Dave Girouard hinted at a potential expansion into small business loans, industrial loans, and credit cards over the long term. Girouard said there are around $25 trillion worth of originations worldwide each year across all loan segments, which translates into a $1 trillion opportunity in terms of fee revenue. He believes all human assessment methods will be replaced by AI within the next decade, and since Upstart is leading the transformation, it could capture a sizable chunk of that value. Upstart generated $213 million in total revenue during the first quarter of 2025. It was a 67% increase from the same quarter in 2024, marking the fastest growth rate in around three years. It was also the third consecutive quarter in which that growth rate accelerated, highlighting the significant momentum in loan demand. As I mentioned earlier, Upstart originated 240,706 loans during the quarter. They had a face value of $2.1 billion, which was a whopping 89% jump compared to the value of the loans the company originated in the same quarter last year. That growth rate also accelerated for the third straight quarter. Upstart also made significant progress at the bottom line because its operating expenses only increased by 11.6%, which was a much slower pace than the increase in its revenue. The company still lost $2.4 million on a generally accepted accounting principles (GAAP) basis, but that was a 96.2% reduction from the $64.6 million net loss it delivered in the year-ago quarter. Upstart's preferred measure of profitability is adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), which is a non-GAAP metric. It excludes one-off and non-cash expenses like stock-based compensation, so it's a good indicator of the actual cash the business is generating. It was positive to the tune of $42.5 million during the quarter, which was a big swing from the loss of $20.3 million from the year-ago period. When Upstart stock peaked in 2021, its price-to-sales (P/S) ratio surged to around 50, which was a completely unsustainable valuation. But the 88% decline in the stock since then, combined with the company's rapid revenue growth, has pushed its P/S ratio down to 5.7. That's a 35% discount to its long-term average of 8.8 dating back to when Upstart went public in 2020. Plus, management's guidance suggests the company will deliver a record $1.01 billion in revenue during the 2025 full year, which places the stock at a forward P/S ratio of 4.2: In other words, Upstart stock would have to double by the end of this year just to trade in line with its long-term average P/S ratio of 8.8. Considering the company's accelerating revenue growth, I think that's a real possibility. The decline in interest rates at the end of 2024 was a big tailwind for Upstart's business in the first quarter of 2025. Wall Street is anticipating two more cuts from the Federal Reserve this year (according to the CME Group's FedWatch tool), which should drive even more demand for loans. But the opposite is also true -- if the Fed cuts rates slower than expected, Upstart's recent momentum could temporarily hit a wall. But investors should stay focused on the long-term opportunity at hand, because if the number of loans assessed by AI continues to grow as CEO Dave Girouard expects, then Upstart stock could be poised for substantial upside over the next decade. Before you buy stock in Upstart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Upstart wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor's total average return is 982% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool recommends CME Group and Fair Isaac. The Motley Fool has a disclosure policy. 1 Amazing Artificial Intelligence (AI) Stock Down 88% You'll Wish You'd Bought on the Dip in 2025 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Time Business News
2 days ago
- Business
- Time Business News
Why VA Loans in Texas Are Gaining Momentum in a Shifting Real Estate Market
As the U.S. housing market recalibrates in response to inflation, tightening credit, and economic uncertainty, one mortgage product is rising in visibility and impact: the VA home loan. Long considered a niche offering, VA loans are now central to homeownership conversations—especially in military-rich states like Texas. This rise in relevance isn't just anecdotal; it's a reflection of deep demographic trends, evolving lending practices, and a renewed focus on financial resilience. For lenders like Herring Bank—who are leaning into the needs of veterans and active-duty service members—this presents both a mission and a market opportunity. Texas is home to more than 1.5 million veterans and boasts some of the fastest-growing metro areas in the country. Cities like Dallas, Houston, San Antonio, and Corpus Christi are popular destinations not just for job seekers and business owners, but for veterans seeking quality of life, affordable housing, and economic opportunity. With its low property tax rates, business-friendly policies, and military installations like Fort Cavazos and Lackland Air Force Base, Texas is uniquely positioned to meet veteran homebuyer demand. But the question becomes: can lenders adapt fast enough to serve this audience well? The core features of VA loans haven't changed much since the program's inception under the GI Bill in 1944. But in today's market, these features are more valuable than ever: 0% Down Payment : In an environment where many buyers struggle to save 10–20% for a down payment, VA loans offer the only mainstream mortgage that requires no upfront equity. : In an environment where many buyers struggle to save 10–20% for a down payment, VA loans offer the only mainstream mortgage that requires no upfront equity. No PMI (Private Mortgage Insurance) : For conventional buyers putting less than 20% down, PMI can add hundreds to a monthly payment. VA loans eliminate this burden entirely. : For conventional buyers putting less than 20% down, PMI can add hundreds to a monthly payment. VA loans eliminate this burden entirely. Competitive Interest Rates : Because they're backed by the federal government, VA loans often come with lower interest rates than comparable conventional products. : Because they're backed by the federal government, VA loans often come with lower interest rates than comparable conventional products. Flexible Credit Requirements: VA loans are often more forgiving of short credit histories or moderate FICO scores, as long as borrowers have steady income. These advantages are compounded in high-cost housing markets, making them especially impactful in major Texas metros. Unlike national mortgage platforms that treat VA loans as just another checkbox, Herring Bank has taken a regional and relationship-based approach. By focusing on Texas communities and providing in-house underwriting, the bank offers a level of speed and personalization that's hard to find in today's highly automated lending environment. The VA home loan team at Herring Bank specializes in walking veterans through every step of the process—from obtaining the Certificate of Eligibility (COE) to navigating appraisals and closing. This hands-on guidance is especially valuable for first-time homebuyers and recently separated service members. From a macroeconomic perspective, VA loans help close the wealth gap between civilian and veteran populations. While many federal programs focus on education and employment, homeownership remains one of the most reliable generators of generational wealth. Veterans using VA loans tend to: Buy earlier in life in life Retain their homes longer Refinance at better rates Avoid delinquency and foreclosure at lower rates than their civilian counterparts This isn't just good for the veterans—it's good for the economy. Stable, long-term homeownership supports stronger communities, increases local tax revenue, and fuels small business growth. According to data from the Department of Veterans Affairs, VA loan usage is at an all-time high. Yet a surprising number of eligible borrowers remain unaware of their options. Common misconceptions include: 'I already used my VA loan once; I can't use it again.' 'It's only for first-time buyers.' 'It's a slow process that's harder to get approved for.' These myths persist despite widespread eligibility and flexible reuse provisions. Lenders and real estate professionals have a role to play in correcting these misunderstandings—and so do financial media outlets and business influencers. National lenders often miss the nuance of local Texas housing markets. Factors like: Rural property eligibility Texas homestead exemptions County-level property tax structures Flood zone insurance overlays …can all affect a veteran's loan process and closing timeline. Herring Bank, by focusing on metro-level support—like in Corpus Christi or San Antonio—ensures that every borrower gets the guidance they need, in the context of their local housing and employment environment. As digital lending tools become more mainstream, expect a wave of innovation in how VA loans are processed and approved. Pre-approval apps, e-closings, and automated COE verification are already speeding up turnaround times for veterans. The next frontier? Hybrid mortgage models that combine VA benefits with renewable energy financing, modular home construction, or co-investment down payment assistance. These are early-stage concepts—but forward-thinking institutions like Herring Bank are well positioned to lead the charge. The Texas housing market is not without its challenges. Affordability, inventory constraints, and rate volatility all continue to pressure buyers. But for veterans, VA loans remain a rare win—both in terms of financial value and legal protection. Banks that understand the unique needs of the veteran community—like Herring Bank—are proving that smart lending can also be service-oriented. And in an era where trust is currency, that's a competitive edge worth watching. Interested in learning more about how VA loans can help you buy a home in Texas? Explore Herring Bank's city-specific programs: Dallas VA Loans Houston VA Loans Corpus Christi VA Loans TIME BUSINESS NEWS
Yahoo
2 days ago
- Business
- Yahoo
What do the different credit score ranges mean?
For some people, looking at credit scores is like reading a new language. Without any context, seeing the numbers alone doesn't necessarily help you understand how good (or bad) your credit is. But learning about credit score ranges can help. FICO and VantageScore — the two leading companies that calculate credit scores — have different score ranges or tiers they deem "excellent," "poor," or somewhere in between. While being in a higher range doesn't guarantee you'll qualify for every new loan or credit card, it certainly helps. As a credit expert and former credit counselor, here's what I believe every person should know about credit score ranges and what they mean. This embedded content is not available in your region. Credit score ranges can be confusing, since they're not always based on the same number of points. For example, some credit score calculations assign you scores between 250 and 900 points (typically, these are industry-specific scores, like when applying for a car loan), while others assign between 300 to 850 (most common). For scores that range between 300 to 850 points, here's how FICO and VantageScore classify each range: The higher your credit scores are, the easier your financial life can be. When you move into a higher range, you'll be more likely to get the credit cards and loans you want, and qualify for certain jobs or new apartments. However, keep in mind that each creditor has its own requirements for the scores needed to qualify for certain products. And once your scores pass 760, you can usually qualify for the best products and lowest rates available, regardless of whether or not you ever move into the "excellent" or "exceptional" range. As I used to (half-jokingly) tell my credit counseling clients who were worried about achieving perfect 850 credit scores, 'Once you hit 760, find another hobby!" There are a lot of places you can potentially go to see different versions of your credit scores for free, but these are the places I recommend looking: If you have a credit card, there's a strong chance you have access to free credit score monitoring through the card issuer. Plus, many banks offer this perk too. For example, if you have a Bank of America credit card, you can monitor your FICO score for free each month through your credit card account. For US Bank clients, you can use your bank account to see your free Vantage score. Want to find out if your bank or creditor offers this perk? Here's where you can look: The bank or credit card app Your online account Your account statements Some banks offer free credit score monitoring, even if you're not a customer. For example, anyone can sign up for Chase Credit Journey or CapitalOne CreditWise for access to free credit scores and more. Our new personal finance platform, My Money, gives users access to their TransUnion VantageScores — plus much more. You can sign up for free here. If you want to see your FICO scores specifically, you can sign up for a FICO Free Plan to get free access to your FICO 8 score. Signing up for a new service might seem unnecessary if you already get complimentary scores elsewhere. But this service only takes a couple of minutes to set up and doesn't require a credit card. So it's valuable if you don't have access to your FICO scores elsewhere. Alternatively, you can use FICO's free score estimator tool without having to set up an account. This tool asks about 10 questions and then estimates your score range. I've always found the tool to be very accurate. However, my most recent estimate was a bit low (755-805) compared to the score I saw on the Free Plan (848). In 2025, the average FICO credit score is 715, and the average VantageScore is 702. Both of these averages fall into the good credit score range. You can pay to see certain versions of your credit scores, but it's not necessary. To see your credit scores for free, you can sign up for FICO's Free Plan or check to see if your bank or creditors offer free score monitoring. Most mortgage lenders require a minimum credit score of 620. However, there are special loan programs where the requirements are flexible. For example, you can potentially qualify for an FHA home loan with credit scores as low as 500.
Yahoo
3 days ago
- Business
- Yahoo
Arrive Home Launches Two New Earned Equity Products
Long-term purchase contract solution provides alternative paths toward homeownership for specific borrower groups SALT LAKE CITY, May 28, 2025--(BUSINESS WIRE)--National affordable housing innovator Arrive Home has launched two new iterations of its Earned Equity Program as part of its continued mission to expand access to homeownership for underserved borrowers. Arrive Home's Earned Equity Program, which helps more consumers achieve their homeownership goals through a long-term purchase contract, is now available in two separate products designed for two different groups of borrowers. EEP Pathway is ideal for ITIN and certain Visa statuses individuals who may be solid long-term renters looking to move on to homeownership. The program, which follows FHA guidelines with enhancements for accessibility, does not require a Social Security Number or FICO score and has flexible guidelines for the self-employed. Using EEP Pathway, lenders can serve ready-to-buy borrowers with confidence. EEP DocLight is designed to help gig workers, first-time buyers and those who may not have qualified for a mortgage under traditional FHA guidelines. The program assesses borrowers using FormFree's RIKI tool for smart, flexible income and asset verification. EEP DocLight's asset-based risk model reviews P&L or bank statements but does not require tax returns or a FICO score, making it a solid choice for non-traditional earners looking to buy a home. Arrive Home first launched its innovative Earned Equity Program in 2023. The program enables participants to enter into a homeownership agreement with monthly payments controlled by a 40-year Homeownership Agreement Amortization Schedule. This allows them to use and enjoy the home as their own, with the intention of eventually buying or assuming the property. At any time during the term of the purchase contract, the participant may buy the home at a price that was fixed when the contract was signed. During the term, the customer has time to improve their credit rating and eliminate other obstacles preventing them from qualifying for a home, eventually buying the property outright using a traditional mortgage loan. Since its launch, the EEP Program has found tremendous success with mortgage lenders looking to serve borrowers previously locked out of homeownership. Now, by designing two EEP iterations intended to cater to different borrower profiles, Arrive Home can help its lender partners reach more underserved borrowers while simplifying the process for all parties involved. "Launching two versions of EEP was a natural next step to expanding access to the program for more Americans looking to achieve their dream of homeownership," said Arrive Home Chief Communications Officer Tai Christensen. "By bifurcating the program, we're helping lenders identify potential borrowers who stand to benefit from EEP's innovation and flexibility." About Arrive Home Arrive Home is a national affordable housing program in the lending space that offers down payment assistance and innovative credit solutions for responsible borrowers across communities. Arrive Home is dedicated to increasing homeownership by working with governmental entities, mortgage lenders and nonprofit groups to offer creative and diverse mortgage products that are designed to enable correspondent lenders to confidently deliver loans to reliable borrowers. In doing so, Arrive Home aims to increase access to homeownership for credit worthy, low- to moderate-income American families, creating generational change one home at a time. View source version on Contacts Press Contact Jacob Gaffneyjacob@ 817.471.7627
Yahoo
3 days ago
- Business
- Yahoo
Arrive Home Launches Two New Earned Equity Products
Long-term purchase contract solution provides alternative paths toward homeownership for specific borrower groups SALT LAKE CITY, May 28, 2025--(BUSINESS WIRE)--National affordable housing innovator Arrive Home has launched two new iterations of its Earned Equity Program as part of its continued mission to expand access to homeownership for underserved borrowers. Arrive Home's Earned Equity Program, which helps more consumers achieve their homeownership goals through a long-term purchase contract, is now available in two separate products designed for two different groups of borrowers. EEP Pathway is ideal for ITIN and certain Visa statuses individuals who may be solid long-term renters looking to move on to homeownership. The program, which follows FHA guidelines with enhancements for accessibility, does not require a Social Security Number or FICO score and has flexible guidelines for the self-employed. Using EEP Pathway, lenders can serve ready-to-buy borrowers with confidence. EEP DocLight is designed to help gig workers, first-time buyers and those who may not have qualified for a mortgage under traditional FHA guidelines. The program assesses borrowers using FormFree's RIKI tool for smart, flexible income and asset verification. EEP DocLight's asset-based risk model reviews P&L or bank statements but does not require tax returns or a FICO score, making it a solid choice for non-traditional earners looking to buy a home. Arrive Home first launched its innovative Earned Equity Program in 2023. The program enables participants to enter into a homeownership agreement with monthly payments controlled by a 40-year Homeownership Agreement Amortization Schedule. This allows them to use and enjoy the home as their own, with the intention of eventually buying or assuming the property. At any time during the term of the purchase contract, the participant may buy the home at a price that was fixed when the contract was signed. During the term, the customer has time to improve their credit rating and eliminate other obstacles preventing them from qualifying for a home, eventually buying the property outright using a traditional mortgage loan. Since its launch, the EEP Program has found tremendous success with mortgage lenders looking to serve borrowers previously locked out of homeownership. Now, by designing two EEP iterations intended to cater to different borrower profiles, Arrive Home can help its lender partners reach more underserved borrowers while simplifying the process for all parties involved. "Launching two versions of EEP was a natural next step to expanding access to the program for more Americans looking to achieve their dream of homeownership," said Arrive Home Chief Communications Officer Tai Christensen. "By bifurcating the program, we're helping lenders identify potential borrowers who stand to benefit from EEP's innovation and flexibility." About Arrive Home Arrive Home is a national affordable housing program in the lending space that offers down payment assistance and innovative credit solutions for responsible borrowers across communities. Arrive Home is dedicated to increasing homeownership by working with governmental entities, mortgage lenders and nonprofit groups to offer creative and diverse mortgage products that are designed to enable correspondent lenders to confidently deliver loans to reliable borrowers. In doing so, Arrive Home aims to increase access to homeownership for credit worthy, low- to moderate-income American families, creating generational change one home at a time. View source version on Contacts Press Contact Jacob Gaffneyjacob@ 817.471.7627
