Impact Enterprise’s goal: A more inclusive method of building credit

When James Garvey and his new wife went on a long trip abroad in 2013, he set up his bills on Autopay. He just forgot one of his credit cards. As a result, his payment was two months late – and that put a strain on his creditworthiness. So he tried to reconstruct his score only to find the options unsatisfactory.

That got him thinking: Perhaps Garvey, who previously founded and sold an email service provider, could create a platform that could quickly start building a credit history and assessing or remodeling an existing one. Started two years later Self-financially, an Austin-based fintech company with an app that allows users to build credit and savings at the same time without having to spend a lot of money or do a credit check. The company has around 1 million members, that is, users who actively use the product and make payments.

That month, the company also expanded its membership to include H-1B and L-1 work and student visa holders.

“We’re trying to create an inclusive system where anyone can use the product as long as they’re 18 or older and have a social security number,” says Garvey.

More inclusive alternatives

When Garvey started looking for ways to fix his bad credit score, he found a few options. There were secured credit cards that allowed users to open a deposit account that would then act as a security in case they missed a payment. But Garvey realized that this was inaccessible to many people as the person needed the extra cash to make the deposit. Or credit unions offered secured loans, which, according to Garvey, were complicated and difficult to use.

It was then that he began to think about more inclusive alternatives that he could build himself. He came up with an app that users can use to apply for a Credit Builders account. The only requirements were a minimum age of 18 years and the indication of the social security number. The account, a bank-owned CD, was paid off in monthly installments – $ 25, $ 35, $ ​​48, or $ 150 – over a period of 12 or 24 months. So unlike a secured credit card, people didn’t have to come up with the money in advance.

Then their payment information was reported to the three credit bureaus, which allowed users to begin building a payment history which, according to Self, represents about 35% of a person’s creditworthiness.

Self works with three banks that handle the lending and pay Self in the backend; Garvey was unable to reveal the exact terms.

Customers who miss a payment will receive a reminder notifying them of a possible late fee. After 30 days, the information is reported to the credit bureaus. “It’s up to the customers to decide if they want to get a good loan,” says Garvey. “If they pay on time, they build a positive credit history – or the opposite is the case.” Users can also close their account at any time.

H1-B and L-1 visa holders

As for H1-B and L-1 Visa eligibility, according to Garvey, the original agreement with the company’s banking partners was that only U.S. citizens or permanent residents could apply for an account. But after many potential users as well as self-employed people in the US with these visas started asking how they could register, he worked with his banking partners to change the terms.

In 2019, Garvey introduced a credit card for Credit Builder customers with a history of three on-time monthly payments, $ 100 or more in savings, and an account in good condition.

The company has raised over $ 127 million, including $ 110 million since early 2020. Garvey most recently announced a $ 50 million Series E this month, led by Altos Ventures.