credit card
Credit card. Pixabay.

Building credit as a newcomer to the U.S. can be extremely challenging. One fintech company seeking to make the process easier has recently secured fresh capital to continue doing so.

Nova Credit uses data and proprietary credit expertise to provide cross-border credit reporting and help lenders qualify immigrants for loans, credit cards, apartments and other services requiring credit checks. Earlier this week, the company raised $45 million in a series C round and looks to use the funds to scale one of its credit products.

Nova Credit currently offers two products: the Credit Passport and Cash Atlas. The first one enables credit lenders to access foreign credit history and qualify people living in Latin American countries like Mexico, the Dominican Republic and Brazil for U.S. services that require credit checks.

Nova Credit declined to share data on the number of customers in an interview with Tech Crunch, however, its website states that it partners with companies like Mastercard, CreditInfo, TransUnion, Experian, Equifax and others.

"In allowing consumers to prove their creditworthiness using information outside of just their U.S. credit score, we're offering more opportunities to gain access to credit products like credit cards, auto loans and even housing," said Misha Esipov, co-founder and CEO of the company. "Businesses use these products to approve more applicants without taking on more risk, and consumers are empowered to put their best foot forward in their applications."

With the new capital, Nova Credit looks to broaden its Cash Atlas product, which provides lenders with data on applicant income.

Nova Credit was founded in 2016 by Stanford University graduate students who wanted to provide new solutions to help immigrants overcome some of the obstacles they face in the finance industry. According to Boundless, an immigrant advocacy group, besides difficulty with credit, immigrants also struggle with opening bank accounts and finding financial service providers in their language.

Challenges like these are part of the reason many Latinos are resorting to fintech companis. According to a Brookings research paper, Latinos are embracing them at higher rates than other groups in the U.S.

When it comes to credit in particular, immigrants often lack a sufficient credit history or have no credit history in the U.S. and are denied services because of that. As a result, they are more likely to seek alternative financial services from predatory providers, according to the Consumer Financial Protection Bureau.

"Traditional credit underwriting practices, which rely heavily on credit bureau reports, have unintentionally excluded millions of consumers from credit and financial services," said Esipov. These consumers are not excluded because they are high risk, but because the current system has gaps in their complete financial background and simply cannot assess potential risk properly."

Nova Credit is not the only company that has managed to raise funds recently: other Latam-focused fintech companies like Albo and Mundi recently and closed multimillion-dollar rounds of their own.

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