Have you applied for a new credit card or loan just to receive the dreaded “insufficient credit history” rejection? You’re not alone. TransUnion estimates that 45 million Americans are credit underserved[1]. Alternative credit data may provide a solution.
Alternative credit data (i.e., not traditional credit scores and reports) can help you qualify for credit products even when you have zero credit history.
In this article, we’ll take a look at what alternative credit data are and which lenders are using this information to extend credit products to those new to credit.
What Is Alternative Credit Data?
Alternative credit data is personal finance-related information that does not usually appear on your credit reports. This can include:
- Income
- Education
- Rental history
- Banking history
- Employment history
- Assets (investment accounts, savings, home, etc.)
- Social media posts
This alternative credit data can be obtained directly from you or through the use of alternative credit data bureaus, like ChexSystems, for banking history.
Creditors who use this information may use it exclusively or consider this alternative data in conjunction with your traditional credit reports and scores to make more informed lending decisions.
In a recent Experian study[2], a whopping 96% of lenders stated that alternative credit data is a better indicator of creditworthiness, and even FICO is jumping on board to create new scoring models.
While the credit industry has not fully made the switch, some lenders are ahead of the curve. Below we’ll explore 10 lenders currently using alternative credit data to determine credit card/loan eligibility.
Credit Cards
Here’s a selection of credit cards that base approval decisions on alternative data.
1. Tomo
TomoCredit offers a charge card with a 7-day autopayment feature to help keep your credit utilization low. There’s no deposit and no interest.
When applying for the TomoCredit card, your credit is not checked. Instead, Tomo looks at alternative credit data. This includes your banking history, as you will need to link to your existing checking account(s).
Tomo recommends you connect to all your bank accounts, including the high-balance ones, to ensure you get the highest credit limit possible.
| Quick Facts | |
|---|---|
| Credit Limit | $100 – $10,000 |
| Interest Rate | 0% |
| Annual Fee | $2.99/month |
| Security Deposit | $0 |
| Rewards | Select partnerships with DoorDash, Lyft, etc. |
Read our full review here for more information on how the TomoCredit program works.
2. Petal
The Petal program offers 3 credit card paths based on your creditworthiness and desired card features. All 3 are fully unsecured credit cards.
To supplement traditional credit scores, Petal developed the Cash Score, which looks at alternative credit data such as banking history and income. This cash score is used in conjunction with your credit score to determine your card eligibility.
You must link to your checking account to receive a cash score.
| Quick Facts | |
|---|---|
| Credit Limit | $300 – $10,000 |
| Interest Rate | 17.99% – 35.49% |
| Annual Fee | $59 (Petal Rise only) |
| Security Deposit | $0 |
| Rewards | Up to 10% cashback at select merchants |
Each of the three Petal cards offers different ranges for APR, credit limit, cashback, etc. Petal provides a full breakdown of card differences on its homepage.
3. Chime
Chime offers a Credit Builder Visa to those looking to improve their credit. You’ll need a Chime checking account and at least $200 in direct deposits to qualify for the Visa. There is no credit check.
Chime works like a charge card. You transfer funds from your Chime account to your Visa card each month. These funds are used to cover card transactions. Any remaining funds can be rolled over to the next month or transferred back into your Chime account.
| Quick Facts | |
|---|---|
| Credit Limit | N/A |
| Interest Rate | 0% |
| Annual Fee | $0 |
| Security Deposit | Secured by Chime Checking account |
| Rewards | None |
Note: While Chime reports like a credit card, they don’t report a credit limit or utilization.
Read our full review here for full information on how the Chime Credit Builder Visa works.
4. OpenSky
OpenSky offers a unique secured credit-building set of cards. There’s no credit check, and you don’t need to link a bank account. All you need to do is verify your identity.
While it is unclear how OpenSky determines eligibility, they list their approval rate at 87%.
Both of OpenSky’s cards are secured, with the lower interest rate basic card charging an annual fee and the higher interest rate Plus card having no annual fee.
| Quick Facts | |
|---|---|
| Credit Limit | $200 – $3000 |
| Interest Rate | 22.39% – 29.74% |
| Annual Fee | $35 ($0 for the Plus card) |
| Security Deposit | $200 |
| Rewards | None |
Note: After 6 months of use and on-time payments, OpenSky may extend an invitation to its unsecured Gold Card with no credit check needed.
Read our full review here for more information on OpenSky® Secured Visa® Credit Card.
5. Cred.ai
Cred.ai offers a zero-fee Unicorn Card and a Cred.ai deposit account. The Unicorn Card works like a charge card and is funded by your Credit.ai deposit account.
While cred.ai can check your credit, account approval is based on your banking history. Specifically, Cred.ai uses ChexSystems to determine eligibility.
As part of the deposit account setup, you’ll need to link to your existing checking account(s). Credit.ai uses this info for approval and setting your Unicorn card credit limit.
| Quick Facts | |
|---|---|
| Credit Limit | Varies |
| Interest Rate | 17.76% (waived with deposit account) |
| Annual Fee | $0 |
| Security Deposit | Secured with deposit account |
| Rewards | None |
For full information on how the Unicorn Card works, as well as a summary of its unique safety and banking features, check out our full review here.
6. Grow Credit
The membership program offered by Grow Credit is a credit-building virtual charge card with dedicated uses. Specifically, the card is designated for paying subscriptions (i.e., Hulu, Netflix, etc.).
To apply for a Grow Credit account, you’ll need to link to your banking institution, which is what is used to determine eligibility. Grow does not use your credit in its decision-making process but may perform a soft pull to verify identity.
| Quick Facts | |
|---|---|
| Credit Limit | $204 – $1800 |
| Interest Rate | $0 |
| Annual Fee | Up to $99/year or $9.99/month |
| Security Deposit | $17 (Build Secured only) |
| Rewards | Select subscription discounts |
Grow Credit offers 4 different virtual cards, each with a set monthly allowance and fee. For more information on each of the memberships, read our full review here.
Loans
Some lenders also use alternative data. Here are some of the currently available options.
7. Self
If you are simply looking to build credit, Self offers a credit-building loan. You make monthly payments on this loan and receive the balance (minus interest) at the end of the repayment period. You receive $0 upfront when you take out the loan.
Since you are essentially loaning yourself money, Self does not require a credit check, nor do they require you to link to your bank account.
| Quick Facts | |
|---|---|
| Loan Amount | $500 – $3000 |
| Interest Rate | 15.72% – 15.97% APR |
| Fees | $9 administration fee |
| Loan Terms | 24 months |
In addition to the credit builder loan, Self offers a Visa credit card with no credit check that is secured by your loan account.
8. OppLoans
OppLoans is a loan marketplace committed to offering unsecured personal loans to a range of individuals that don’t traditionally qualify. They work with several partner lenders and can directly service loans in select states.
OppLoans will request your income information (and possibly proof) and banking information to determine if you are approved for a loan and for how much. OppLoans may do a soft pull of your credit, but there are no minimum credit eligibility requirements.
| Quick Facts | |
|---|---|
| Loan Amount | $500 – $4000 |
| Interest Rate | 160% APR* |
| Fees | Fees included in APR |
| Loan Terms | 9 – 18 months* |
* Interest rates and loan terms can vary by state. The above values are what OppLoans uses to illustrate potential payments. Your rates and terms may differ.
9. Upstart
This loan marketplace offers personal loans and auto refinance loans with a preapproval process that doesn’t hurt your credit.
Unlike some of the other lenders on this list, Upstart will check your credit. A soft pull is generated during preapproval, and the final application will result in a hard pull.
Upstart also considers alternative credit data such as income and education. If you have little to no credit, this may help qualify you for a loan, but there is no guarantee.
| Quick Facts | |
|---|---|
| Loan Amount | $1,000 – $50,000 |
| Interest Rate | 4.6% – 35.99% APR* |
| Fees | Origination fees are included in APR |
| Loan Terms | 3 – 5 years |
* The APR range was established using a credit-score-only model. The APR you receive may be outside this value if alternative credit data is used.
10. Earnin’
The Earnin’ app lets you apply for interest-free cash advances on your next paycheck. You can request up to $100 a day (max $750 total). Once your paycheck hits your bank account, you’ll be debited the advanced money.
Earnin does not require a minimum credit score; they don’t even check your credit. All they look at is your income and banking history. Depending on this information, they may alter your maximum daily and pay period values.
| Quick Facts | |
|---|---|
| Loan Amount | Up to $100/day and $750 per pay period |
| Interest Rate | $0 |
| Fees | None (small fee for lightning deposit) |
| Loan Terms | Debited automatically from next paycheck |
While Earnin doesn’t charge any fees for its services, they do request tips. Tips are 100% optional.
Final Thoughts
Credit doesn’t have to be a catch-22. With alternative data, you can qualify for credit products without having a credit score.
You’ll still want to pay close attention to the rates and terms as these no-credit-check products sometimes come with high fees or near-predatory interest rates.
The good news is if you manage these starter cards/loans well, they’ll report positively to the credit bureaus. This will help you build your credit score and avoid future insufficient credit history rejections.
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