Fintechs take on Equifax to help immigrants get credit access in the US

TomoCredit, Black Opal and Homeis are among the companies helping immigrants build credit & community

Several fintechs are focusing on working with or helping immigrant communities to improve their credit score, build a credit history and find other people who share the same cultural experience while providing financial tools and resources that empower them. 

Kristy Kim founded TomoCredit because she was personally frustrated in her 20s when she attempted to get approved for an auto loan. She was rejected five times because as an immigrant she did not have a credit history and had to resort to buying a car with cash.

“I realized that without good credit, everything is more difficult,” she said. “I wanted to help people build their credit scores efficiently, so they can achieve the American dream without a struggle.”

Kim realized there was an opportunity to help other immigrants avoid the same hassle and pain of not having a credit score. Since she did not have a credit history, lenders rejected her auto loan because credit scoring agencies utilize a person’s history of paying off previous debt to predict the likelihood of them repaying any new debt. Even though she graduated college without incurring any debt because of help from her parents, she lacked a credit history. 

Not having a credit history in the U.S. means that companies like Equifax, TransUnion and Experian can not provide a financial score for an individual, leaving them unable to finance a car loan, obtain auto insurance or lease an apartment or house.

San Francisco-based TomoCredit is backed partially by Barclays Bank through its fintech accelerator and offers a credit card without charging any fees or requiring a deposit from immigrants. A credit history is not required and no interest is charged. There is a seven-day payment schedule that helps people build their credit history faster.

“I was a young immigrant from Seoul, South Korea and I had no credit history. Tomo is designed to help millions of people like me.”

-Founder Kristy Kim

Instead, the company examines a consumer’s banking history and sources of income to determine if they are eligible, which is helpful to millions of people without credit histories such as immigrants and college students, she said.

Rather than relying on credit scores to assess applicants, TomoCredit looks at a person’s banking history and sources of income to determine eligibility. The company has pre-approved over 100,000 cards and is planning to issue 1 million cards in 2021. The fintech raised $7.2 million from venture capital firms and banks, including Passport Capital, Knollwood Investment Advisory and Kookmin Bank

The startup’s tech is powered by Galileo, a Utah-based payments infrastructure provider that was acquired by SoFi for $1.2 billion in a cash and stock deal. Galileo is the API standard for card issuing and digital banking.

“Increasing accessibility to financial services is at the heart of Galileo’s mission,” said Galileo CEO Clay Wilkes in a written statement. “We feel privileged to contribute to TomoCredit’s disruption of the credit system by offering access to credit to millions of financially responsible consumers without a credit score who are working to build a better financial future.”

Besides immigrants, expatriates are not able to obtain credit because they do not have credit scores when they first move to the U.S. Matt Holden, founder and CEO of Denver-based Black Opal, developed a credit card to address the gap.

“Black Opal is my fourth startup and I really wanted to solve the problem of expats and professionals moving to America and the shock that all of us face which is – you can’t get credit,” he said.

Expats have a thin credit file since there is not a credit history for lenders to examine the potential of a consumer paying back a credit card or loan. Banks in the U.S. “won’t touch those so the first year or two when you are here and it is downright miserable,” Holden said.

With limited banking options and no credit history, “a lot of folks, myself included, lived on our credit cards from our home country,” he said.

Black Opal aims to address this market segment – each year 14 million people arrive in the U.S. on various visas.

“We focus on the 750,000 professionals and help them make a start and be with them in their journey in the great land of America,” Holden said.

The credit card will be one way for expats to access credit faster and easier since Black Opal will use a person’s home country credit file. Creating a credit history in the U.S. will also help consumers get access to housing and auto loans.

The company is conducting a pre-launch of its card – there are over 4,000 pre-registrations for the card from 14 countries and is aiming for mid 2021 when the economy rebounds.

“Socially, if our customers are making money, then they are paying more in taxes and that in the holistic cycle is also better for the U.S.,” he said. 

Black Opal is currently fundraising and has raised over $1 million from private investors.

“One of the great things about Black Opal is we’re a company built by expats for expats,” Holden said.  “We know the pain and want to be that pivotal partner for our customers.”

Another startup working with immigrants is Homeis, a digital platform for immigrant communities around the world that was founded in Tel Aviv and New York in 2017. The startup has groups such as South Asians in the U.S., French in Israel, Latinos in Canada and South Asians in the United Arab Emirates and seeks to connect people with local immigrant communities to share their culture and local knowledge digitally. 

Homeis now has 1 million registered members and offers financial services by partnering with fintech companies, neobanks and financial institutions in the remittance industry to give immigrants a “platform that will solve all of their needs in one place,” said Ran Harnevo, CEO of Homeis. These financial services are being shown in their own language.

The company partnered with remittance industry companies such as Afriex, Remitly, TransferWise and WorldRemit so individuals can send money home to their family members. Consumers can also search for banks recommended by other users in their local community or seek out medical, car and life insurance, apply for consumer or small business loans. 

“In the last few months we’ve added more and more financial services to Homeis, partnering with the best startups in the space,” he said. “We believe that the fragmentation in the space is a problem to both our users and the service providers.”

Harnevo is an immigrant from Tel Aviv and founded the platform with the goal to help the 300 million immigrants “find their wings in new countries, without losing their roots,” he said. 

“Homeis empowers foreign-born people to build communities around their culture, shared experiences and practical local knowledge,” Harnevo said. “We are trying to build a better Internet for immigrants.  “We believe that the problems of foreign born people are unique and complicated.”

The company has both an iPhone and Android app that helps immigrants who have just moved to another country build a network and develop friendships in their new country. Users can select cities and make friends with locals who share the same homeland and culture.

The platform gives people the ability to find new friends, restaurants, relationships and jobs and also find recommendations for local services and events. 

“As of late, Homeis has transformed into a safe space and sounding board for immigrants looking for support during the pandemic,” he said.

The startup has seen “exponential growth” since March and states it is the “largest” community for Latinos, South Asians and Africans in the U.S. and Canada and is expanding to include new nationalities.

Homeis has raised a total of $16 million as of August 2019, with $12 million in a Series A round led by Canaan Partners and Spark Capital. The other backers of the startup include Abstract VC, The Chernin Group, Samsung Next, AOL’s former CEO Tim Armstrong, Taboola CEO Adam Singolda, Reddit co-founder Alexis Ohanian and other investors. Homeis raised a $4 million seed round in late 2017 that was also led by Spark Capital & Canaan.

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