New credit cards based on credit potential, not credit score
A new breed of credit card has arrived, and you don’t need a credit score to get one.
Generation Z is beginning to come of age, and a handful of fintech pioneers are aiming to remove the obstacles that have faced college students, young adults and immigrants for years: the catch-22 of needing a credit score to get credit so you can build your credit score.
At least two companies are at the forefront of this trend, and they’ve devised innovative ways to provide credit cards to 18- to 29-year-olds based on their credit potential instead of an existing credit score.
Deserve has recently launched two such credit cards in recent months, and Petal is currently offering a waitlist for early access to its new credit card.
It’s a timely move, as Generation Z already represents a quarter of the US population and is projected to grow to two-fifths of all Americans by 2020.
Instead of a credit score, Deserve uses alternative data analytics and machine learning to focus on your current financial health, education, future employability and projected earnings.
Formerly tested as SelfScore for the past two years, Deserve has rebranded and launched a Deserve Edu card for college students and a Deserve Pro card for everyone. Both enjoy no annual fee, security deposit, cosigner, foreign transaction fees or Social Security number required.
The Edu card offers 1% cash back on all purchases, an 18-month subscription to Amazon Prime Student, a credit limit up to $5,000 and a 19.99% variable APR. The Pro card gives you 3% cash back on travel and entertainment, 2% cash back on restaurants, 1% cash back on everything else, a credit limit up to $10,000 and a variable APR of 17.24% to 24.24%.
Meanwhile, when Petal’s card becomes available, it also won’t need a credit score; your eligibility will be based on your income and previous bill payments. Petal charges no annual fee, overdraft fee, late fee or international fee. Its credit limits range between $500 and $10,000, and its interest rates are variable APRs between 14.24% and 25.24%.
Learn more about the Petal card in our review.
Other than these emerging credit potential cards, consumers have been limited to building their credit through secured credit cards or co-signing with a parent. Learn much more and compare your options in our guides to credit cards for those under 21 and the process of applying for your first credit card.