When Cynthia Chen arrived on the Columbia University campus in 2000, she was 17 years old, from Beijing to a new land, and completely alone. She had zero credit to her name – she had never seen a credit card.
Fast-forward 26 years and he runs Kikoff, a credit-building company with over a million active users and a $1 billion valuation—officially “unicorn” status in the tech world (1). The company is expanding its AI offerings, including avatars that can call debt collectors on behalf of customers.
As far as he came, Chen said with money It was her first experience as a student paying cash while others used credit cards that taught her what it means to have access to credit in America.
“I realized how important it would be for someone like me, a new immigrant with no credit to see, to build credit so I could get around in this country,” she said.
Chen co-founded Kickoff to support people who are “credit invisible,” those who have no credit history or what he calls “thin files.” For them, getting a loan is not the only challenge. It can also be difficult to do basic things like renting an apartment or passing a background check for a new job.
At last count, according to the Consumer Financial Protection Bureau (2), there were 7 million “credit invisible” Americans.
The group includes students, immigrants and women who may struggle to get credit because they are in unpaid or low-income work, or because their male partners have credit cards.
That’s how Chen says her company is trying to help.
Kikoff is designed for people with no credit scores or less than 600. For conditions, credit scores range from 300 to 850.
Chen says the goal is to help Kikoff users raise their credit scores above 600, which is at least what most landlords, potential employers, car dealers and mortgage lenders look for when signing contracts.
He adds that many Kikoff users see their credit score improve by an average of 86 points over the course of a year.
It may not seem like much, but China says it can be life-changing for someone who starts with a score below 600 and goes over that threshold. This means qualifying for a better apartment or even a mortgage.
The three major factors that go into your credit score are: Payment history (35% of your score, up to 298 points) Use of credit (30%, up to 255 points) and Length of credit history (15%, up to 127.5 points).
Read more: The average net worth of Americans is a staggering $620,654. But it makes almost no sense. Here’s the number that counts (and how to make it skyrocket)
Kickoff works to improve these areas through a subscription-based model that starts at $5 a month.
Each month, users pay their subscription and the company reports these payments to the three credit bureaus, Equifax, TransUnion and Experian. It helps to establish a positive payment history and length of credit history on individuals credit reports. The company may also report the customer’s rent and utility payments to the credit bureaus.
“It gives you credit for what you’re already paying each month,” Chen said.
Customers also receive a $750 credit that can only be used at the Kickoff store, where they can purchase financial literacy e-books, courses or subscription renewals.
Chen says it’s fine if users don’t spend any of the $750 credit. In fact, it can help their credit score. Credit bureaus deduct points from people who max out their available credit. The more credit there is, the better.
Customers can also sign up for additional credit options, including a secured credit card. It helps to build them Credit mixwhich makes up 10% of the credit score and is worth up to 85 points.
Another way the company is helping improve credit scores is by using AI to identify errors in credit reports and submit disputes on behalf of consumers to credit bureaus.
Chen acknowledges that some people may feel uneasy about AI services, but these are opt-in programs that require full customer satisfaction. Recently, the company launched an AI-powered debt negotiation service that can negotiate payment plans with collectors on behalf of Kikoff customers.
This tool is especially useful for consumers with disabilities, including those with hearing or speech impediments who may struggle to call lenders.
The latest version of the app includes a Spanish language option, part of China’s ongoing commitment to support credit invisibility.
“This is the community that I have at heart,” he says.
While he acknowledges that Kikoff has helped boost consumer collective credit scores by over 200 million points, he acknowledges that there is still a long way to go.
“The level of debt in America is only going up,” he says, pointing to figures like the $1.28 trillion Americans have in credit card debt.
He also admits that even with a credit-building app, there’s no quick fix for bad credit.
“I wish there was a magic trick where you could turn a 500 credit score into an 850 in a second,” Chen said. “Persistence and perseverance and faith in the process will be very important.”
It worked for her. Chen is now banking on it working for his clients.
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Medium (1); Consumer Financial Protection Bureau (2)
This article provides information only and should not be used as advice. It is provided without warranty of any kind.
