US fintech startup Petal has unveiled a credit card designed for people with non-prime credit scores in the wake of the Covid-19 crisis.
Petal 1 is the firm's second credit card. Like the first, it is a no-annual fee Visa card paired with a mobile app. However, while the first card - now called Petal 2 - focused on those with no or thin credit histories, the new card is aimed at a wider audience: people who already have a history that is fair or poor.
Petal - which recently raised $55 million in funding - says that nearly half of all Americans have a non-prime credit score and this is likely to increase with the fallout from Covid-19. At the same time, issuers are issuing fewer cards during the pandemic.
Rather than relying solely on credit scores, Petal has built proprietary technology that analyses banking history — measuring creditworthiness based on income, spending, and savings.
The process, referred to as “Cash Scoring”, measures economic fundamentals that aren’t typically considered in a credit approval decision, helping people that traditionally have trouble getting credit.
The new card is designed to help users build their credit, with an app that gives members access to credit score tracking, budgeting tools, subscription management, and automated payment options. Users can then graduate to the Petal 2.
Says a blog: "So many other communities are being underserved and overcharged in today’s credit system, especially in the wake of Covid-19. With the introduction of Petal 1, we hope to help solve this problem and put many more Americans back on the path to financial success."