TomoCredit raises $122 million for fico-free credit product
Credit card lending platform TomoCredit on Thursday (July 21) closed a $122 million fundraising round including both equity and debt that will be used to expand the company’s No-Fico credit products, according to the company’s press release.
Morgan Stanley’s Next Level Fund, MasterCard and Silicon Valley Bank debt led TomoCredit’s funding effort. The round of the company founded by immigrant women was oversubscribed by FinTech investors and cultural funds, including GoldHouse, the Asian Hustle Network and Hyphen Capital.
“As a first-generation South Korean immigrant, I wanted to help immigrant communities achieve their American dream faster with TomoCredit,” Kristy Kim, Founder and CEO of TomoCredit, said in the press release. ‘company. “It’s been wonderful to partner with minority-focused funds that truly understand Tomo’s mission.”
TomoCredit’s proprietary underwriting algorithm – dubbed Tomo Score – identified high-potential borrowers with no credit score and saw market demand for its first product, the TomoCredit Card, which requires no credit checks, no deposits , no APR and no flux, the press release said. The company increased its turnover by 1000%.
TomoCredit plans to use the new capital to expand its credit product offerings, including auto loans and mortgages with its underwriting solutions.
“We decided to add more capital for two main reasons,” Kim said. “First, we’ve seen incredible organic requests over the past couple of years and we wanted to hire top talent to keep up with that organic growth. Second, we want to take full advantage of new consumer trends of avoiding high APR products. »
Related: Clenched-fisted U.S. consumers are sitting on $3.3 billion in untapped credit card lines
Meanwhile, U.S. consumers are sitting on an estimated $3.3 trillion in untapped lines of credit as interest rates hit historic lows and the Fed considers raising interest rates to a point. full next week. Earlier this month, the Philadelphia Federal Reserve said in its quarterly report on major bank credit cards and mortgages that “customers are using their available lines of credit less.”
In fact, as the Fed noted, credit card balances are 11% lower than levels seen at the end of 2019, just before the COVID-19 pandemic hit. Data shows that US consumers have approximately $3.3 trillion in available credit on their credit card. Perhaps unsurprisingly, mortgage originations at major banks, measured by volume, were down 28% in the first quarter of 2022, year-over-year.