When It Comes To Lending, Earnest Gives Credit Where It’s Due

Earnest, the online lending service targeting millennial borrowers, is launching a new customized interest rate for its customers.

The new product for Millennials allows the company to offer low-interest loans, typically between 4.25% and 5.25% for qualified customers. Interest rates, says Earnest Lending’s chief executive Louis Beryl, “should be about what people deserve to pay, not what they would be willing to pay.”

Earnest, which raised $15 million in equity and debt funding last year from investors including Andreessen Horowitz, Atlas Venture, The Collaborative Fund, First Round Capital and Maveron, began making its first loans earlier this year. The company’s average loan size is roughly $10,000 and it offers loans of up to $30,000. To date, Earnest has lent about $3 million.

“There’s a slew of regulations that have really constrained larger financial institutions ability to innovate,” says Beryl. “And there’s a real desire from Millennials to be served by a product that speaks to them and does something differently.”

Using data analytics Earnest is able to offer one-, two-, and three-year loans to new borrowers who have short credit histories, large student loans, or are just entering the workforce. These non-traditional borrowers are often overlooked by financial services institutions that are typically need more information about their borrowers. Earnest bases its interest rates on not just a credit score, but also on a person’s employment history and future earnings potential, Beryl says.

Loan applicants fill out an online questionnaire, which gives the company a picture of income and monthly savings, budget, credit history, education and career trajectory to receive an individualized rate based on their specific credit profile.

Earnest loans are currently available in California, Colorado, Connecticut, Florida, Georgia, Illinois, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, Utah, Washington, D.C. and Wisconsin. Interested applicants should go to www.meetearnest.com.

“We’re expanding so that we can serve more people,” says Beryl. “What we really believe is in completely aligning ourselves with our clients. We’re not in the business of originating loans with large lenders.”