No Credit Score? Say Hello to Petal Card

EXCLUSIVE – With its first credit card out today, New York fintech Petal aims to serve the “credit invisible,” according to its CEO and co-founder Jason Gross, by granting credit cards sans credit score.

Instead of focusing on credit scores, Petal looks at an applicant’s financial behavior. The consumer’s digital financial profile has three main drivers to show their payback behavior, Gross explained. These drivers are income, stability of income and willingness to pay their expenses.

“There are over 65 million people in the U.S. with no or misrepresented credit scores, either because they are too young, or because they’re veterans, emigrants or even people that are divorced, who have historically built their score jointly with their former spouse,” Gross said. “A lot of the problem is due to lack of data which is heavily skewed towards young people, and disproportionately towards minorities. Our goal is to grant them access to credit.”

The Petal card, which is powered by Visa, starts with a credit line of $500 and goes up to $10,000. The average amount ranges between $2,000 and $3,000, Gross said. The card has no fees of any kind – overdraft, late or annual. The APR on the card ranges between 17.99% to 24.99%, “lower that the other introductory cards,” Gross said.

Petal will use a credit score, only if  available. It doesn’t require a FICO score, but if the applicant has one, it will include the data to form their profile.

The card rivals mainly with introductory credit cards, which were initially created with the idea to cater to young adults, sometimes as young as 18 years old, provided there’s a co-signer.

Petal too hopes to serve this demography of young adults (21 years and older), but also the young adults who haven’t been working long enough to build a credit score.

“These are young people who are working, managing their expenses and paying their bills, but by a debit card. So they aren’t really building a credit score, but because of the financial data we have access to, we know they are responsible and have good financial behavior,” Gross said.

The application for a Petal Card is similar to that of financial platforms such as Robinhood, Betterment, Mint, or Acorns with the additional step of allowing Petal a secure, read-only access to their bank statements, Gross said.

Petal will verify the data, and be able to grant approval instantly.

Right now, the card can be obtained through ‘Invitation Only’ in beta. Petal uses machine learning to underwrite cash flow. Gross declined to disclose Petal’s issuing bank partner at this moment.

Another component of the card is Petal’s digital app.

The digital platform lets users track their spending and “most importantly better understand their payment decision,” Gross said.

For example, Gross said, Petal calculates the interest on a payment by using the true grace method of calculation.

“So, when a customer does not pay the full balance on a payment, we calculate the cost they will pay, including the interest and express it in dollar amount,” he said.

This makes the customer aware of the additional charges added to the original amount because of the interest rate.

Founded two years ago, the Petal Card is the company’s first product. So far, Petal has raised $3.6 million to fund the product. Some of the investors include Brooklyn Bridge Ventures, Afore Capital, Rosecliff Ventures, Guild Capital, Great Oaks Venture Capital, Story Ventures and Silicon Badia.

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