TomoCredit, the US startup behind a credit card designed to help first-time borrowers build credit history, has raised $10 million in a Series A funding round led by Kapor Capital and KB Investment, a subsidiary of South Korea’s Kookmin Bank.
TomoCredit says that Consumer Financial Protection Bureau statistics show 76% of GenZ and Millennials have not previously built up a credit history, meaning that 40 million people can't access credit, including cars and homes.
The firm is targeting these young Americans, as well as foreign-born people - both of the firm's founders are immigrants - with its answer to this problem.
Powered by Mastercard-owned open banking player Finicity, TomoCredit accesses applicants' bank accounts to see financial data for underwriting purposes. Once approved, applicants receive a no-fee Mastercard credit card with 0% APR.
The company has already pre-approved more than 300,000 customers and expects to issue a total of 500,000 cards by year’s end.
The new funding will be used to make hires and work on features like weekly AutoPay and High Credit Limits to boost credit scores faster.
The company has also appointed Ash Gupta, former CRO at American Express, to the board.
Steve Smith, CEO, Finicity, says: "The team at TomoCredit understands the value of open banking, the wide range of data and how it can deliver richer insights and better decisioning to drive inclusion for those who are underserved by traditional borrowing processes."