This month, one New York startup garnered some attention for trying to revamp the credit card industry. By utilizing a new underwriting method, startup company Petal hopes to cost effectively offer its own credit card to potential cardholders with lacking credit histories.
Petal is actually offering its own credit card to consumers who are missing pieces when it comes to applying for credit cards. The credit card is backed by an undisclosed bank, so Petal itself is not extending the lines of credit to its potential customers.
This new underwriting method banks on other pieces of financial data such as checking account history, history with prepaid debit cards, and other financial info. The main hope is to accurately assess one’s ability to handle credit without the much relied upon credit score. Notably, the underwriting system will still take into account credit score so long as it is there.
Such a system would help increase the chances of an un-creditworthy applicant getting approved for any credit card, but in this case, it would help them get a hold of the Petal Visa card.
It can be assumed that Petal is looking to target new-to-credit populations, mainly involving young adults working their first job, lower income consumers, and immigrants entering the credit markets for the first time according to Jason Gross, CEO and co-founder.
Currently, the card is not made public, but it is currently offered privately. It comes with a credit limit ranging from $500 to as high as $10,000. Standard APR is variable and ranges from 17.99 to 24.99 percent. And there are no listed fees on the company website.
Author: Andrew Rombach
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