“If you apply for a credit card and they reject you, then what do you do?” Self Lender CEO and co-founder James Garvey asks in our latest episode of VentureKast. In the U.S., 45 million adults do not have a credit score, while another 68 million have a low score (600 or below). It’s a problem that’s hard to fix: To improve your score, you often need to gain access to credit first, but credit is out of reach to those without good credit scores. For many Americans, this is a frustrating paradox. On our latest episode of VentureKast, the podcast about the most innovative and impactful financial inclusion startups in the world, I sat down with James to discuss Self Lender, an Austin-based fintech startup that is helping consumers to build their credit while they save.
James was inspired to start the company after he realized his credit score was hurt because he mistakenly had missed payments on a credit card bill. Since then, the company has grown substantially. They’ve now reached over 140,000 customers, representing more than $100 million in loan volume.
“If you don’t have a credit score, everything gets more expensive,” James remarks. The benefit to customers isn’t just the new credit score; it’s also the freedom that comes with it. An improved score can mean approval for an auto loan or a mortgage for a new home. Self Lender empowers customers to demonstrate their creditworthiness and gain financial freedom.
“If you don’t have a credit score, everything gets more expensive.”
Self Lender helps customers achieve that freedom by offering a fully digital “credit builder loan.” When they sign up, customers take out a loan, which is placed directly into a bank account that customers cannot spend for at least a year. As customers pay back the loan, their payment history is reported to the credit bureaus. At the end of the term, they receive the amount from the account, having built up both their credit score and some savings.
On average, customers with no history go from 0 to 670 over 6-12 months of on-time Self Lender payments. Customers with damaged credit typically see an increase of 45 points. In the process, they’re also putting money toward their savings.
“The long-term vision is that Self Lender becomes a platform to get simple, affordable financial products,” James says. He adds that “it’s for people who are new to credit or rebuilding credit.” Venture Lab is proud to support James and the Self Lender team as they help American consumers to build a financially healthy future.
Listen to our interview to learn more about the company and their story.