The hunt for solid credit card customers is driving issuers to try creative new approaches, including digging deeper for good prospects who fall outside the usual parameters of U.S. credit scoring models.
The latest example is CreditStacks, a San Francisco startup that’s working with First Century Bank to issue a Mastercard-branded credit card to global professionals relocating to the U.S. who have work but no credit card, payment history or even a Social Security card.
CreditStacks provides applicants with an immediate credit line, using a behavior-based risk model to determine the applicant’s likelihood of repaying the loan in exchange for building a credit history through the card.
Applicants need only provide a passport, a visa and proof of income, and CreditStacks will grant up to $5,000 in credit immediately, with no fees or interest if the account is paid on time each month, CreditStacks said in a Thursday press release.
Once the account is established, CreditStacks promises to begin reporting payment history to the major U.S. credit bureaus to build the applicant’s credit history in conjunction with the issuer, Gainesville, Ga.-based First Century Bank.
The concept is a different take on targeting consumers who want a credit card but have little or no credit history. One example is Deserve, which launched last year, targeting students who have a SSN but no track record with credit; another is Petal, which uses artificial intelligence to analyze credit card applicants’ income, savings and payments history before granting them a credit card.
CreditStacks CEO Elnor Rozenrot, a serial tech entrepreneur, said the product grew out of his experience years ago when he moved to the U.S. from Israel after selling a company and couldn’t persuade a bank to extend him credit.
“I found myself standing in front of a clerk at the bank who was explaining that since I don’t have any credit history, all I could get was a debit card,” Rozenrot said in the release.
CreditStacks says it doesn’t matter whether applicants have a bank account and they may apply for the card up to 60 days before arriving in the U.S.
The product fits in with Mastercard’s efforts to expand payment products to new audiences, including financially underserved consumers, said Sherri Haymond, Mastercard’s executive vice president of digital partnerships, in the release.