Self Lender, a unique platform allowing individuals to build their credit through essentially a loan to themselves, launched in early September. Under the Denver-based company's offerings, people with low or underscored credit can build credit through their payment history with the company.
"Almost 70 million people in the U.S. may have subprime credit because there isn't any payment data on them," contends Self Lender CEO James Garvey. "About 100 million people have subprime credit for other reasons, but really there's a huge opportunity to help people that have low scores or are underscored. The problem with building credit is it requires that you have existing credit. It's a catch-22."
"At Self Lender we allow anybody to start building their credit history with a small loan," Garvey says. "The idea is I'm going to create a $50 per month obligation for six months. After paying for the entire 6 months, we return your money." During that period of time Self Lender reports that payment history to the credit bureaus.
"It comes up as an installment payment that looks like an auto loan or a mortgage," Garvey says. "What we've seen from other nonprofits is that if you are unscored, after six months of using a credit builder loan like this you will have a credit score in the 600s. If you have a credit score already, it's going to vary, but usually you'll see a bump."
Self Lender charges an administrative fee of $3 a month, no matter the size of the individual's commitment. So a 12-month commitment would cost a customer $36 and a three-month commitment would cost them $9. At the end of the repayment period, the funds, which were set aside in a escrow account, are returned to the customer or Garvey says Self Lender is working with some car lenders to allow customers to use the fulfilled agreement to serve as a down payment.
Self Lender is already generating interest. The launched at
TechCrunch Disrupt on Sept. 9. "We were one of the 26 companies to present," Garvey says. "We were runner-up for Accenture's Innovation Enterprise Disruptor Award."
At this point, the company is working to finalize an agreement with a bank. Garvey explains that the bank is doing its due diligence for the agreement but thinks it will be finalized soon.
Contact Confluence Denver Innovation & Jobs News Editor Chris Meehan with tips and leads for future stories at chris@confluence-denver.com.
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