Obtaining a credit card is rather easy in the Western world. All one needs is a credit history and other documentation to do so. In a lot of countries, obtaining a credit history is virtually impossible. This is where Petal comes into the picture. This US-based startup wants to sign up more people for a credit card regardless of their financial history. A risky approach, but one that may work out in the end.

Getting a credit card as an unbanked individual is virtually impossible. No financial institution in the world will offer such a product without a credit history check. That is quite problematic, for many different reasons. Petal hopes to make a positive impact in this regard over the next few years. The US credit card startup ditches traditional credit scores. Instead, they want to sign up more young people and unbanked individuals for their credit card. An ambitious goal, but one that seemingly has a lot of merit.

Petal Keeps Trucking Ahead Nicely

More specifically, Petal raised $13m in Series A funding this week. The round was led by Peter Thiel’s Valar Ventures. The current credit scoring method is woefully inefficient in this day and age. Especially for lower-income consumers, it can be a big problem. Moreover, immigrants also face a lot of problems when trying to obtain basic financial tools. If there is no credit history, such services will remain off-limits to these individuals. A problematic situation which needs to be rectified as soon as possible. Petal claims they have what it takes to make this happen.

Petal CEO Jason Gross comments as follows:

“Something is terribly wrong when the industry decides an entire generation is, on average, subprime. Today’s credit system unfairly labels young Americans and other new-to-credit borrowers as ‘high-risk’, then punishes them with high interest rates and excessive fees. Petal breaks that cycle, using technology to give tens of millions of people the credit they deserve.”

The company’s Cashflow Underwriting is an interesting tool. It uses machine learning and common sense to analyze an individual’s digital financial record. This should lead to a better understanding of how much someone can afford to borrow. Additionally, it helps gauge the credit risk one can handle with relative ease. The company already issues a no-fee credit card with a companion mobile app as we speak. For now, the company will focus on expanding the team and offer the card to more users.

Header image courtesy of Shutterstock


About Author

JP Buntinx is a 30-year old FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he is working to achieve the same level of respect in the FinTech sector.

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