ZestFinance, the Los Angeles-based startup using machine learning to assess credit risk for personal loans, has raised a $20 million series round of venture capital. Peter Thiel led the round, with Northgate Capital, Matrix Partners, Kensington Capital Holdings, Eastward Capital Partners and Lightspeed Venture Partners also participating.

ZestFinance is the brainchild of former Google CIO Douglas Merrill and Shawn Budde, the former Head of Subprime Credit Cards at Capital One. The company provides an underwriting model to lenders that aim to serve individuals with bad credit or who are otherwise underserved by traditional banking products.

The magic behind ZestFinance's methods are the approximately 70,000 variables its models considers, which are then analyzed using a number of machine learning algorithms. Once the algorithms have done their job, humans step in to apply some logic, judgment and  context to the results. All told, ZestFinance claims a roughy 60 percent improvement over traditional underwriting models, and a repayment rates 90 percent higher than traditional methods.

In January 2012, ZestFinance raised a $73 million series B round that included $23 million in equity financing and $50 million in debt financing.