- American Express and fintech startup Nova Credit debuted a "credit passport" Friday that lets immigrants from five countries share their international credit histories within Amex's online application to build credit in the U.S.
- The card provider is targeting the 46 million people who have left another country to move to the U.S., a number four times higher than in any other nation in the world, an Amex executive said Sunday at the Money20/20 conference in Las Vegas.
- Exchange students and immigrants in specialized professions tend to have robust credit histories and high credit scores in their home countries, Sarah Davies, head of risk and analytics at Nova, also said at Money20/20.
The lack of credit in the U.S. — or being "credit-thin" — can be a barrier for immigrants and others looking to get student loans, apartment leases and mobile-phone plans.
For Davies, the mission is personal. She's British, and said she experienced several roadblocks in her journey to becoming banked in the U.S.
New Yorker Sara Milsten, senior vice president of new member acquisition for U.S. consumer services at American Express, painted a broader picture, citing ride-sharing and restaurant reservation apps.
"Unlike your Uber account, your credit history remains rooted in your home country," she said at Money20/20. Newcomers are denied credit in the U.S. not because they're not creditworthy. "It's that their credit history isn't neatly packaged and translated," she said.
That, essentially, is what Nova Credit's technology does — reinterprets international data into a U.S. credit score.
Amex's partnership with Nova Credit appears to be the first to use the work of credit bureaus abroad to help with lending in the U.S. But several other fintechs provide credit cards to immigrants.
Startup TomoCredit rolled out a plan in August to give credit cards to students and millennials with no credit score and no credit history. Petal launched a credit card last year with its eye on the U.S.'s 65 million credit-invisibles, using cash flow rather than credit score as a key factor in approval.
The five countries whose credit bureaus are participating in the Amex/Nova program are Australia, Canada, India, Mexico and the U.K. Immigrants and returnees from those countries "are more than five times as likely to be approved as they would be through traditional underwriting solutions for new-to-credit applicants," Milsten said.
And some of those countries have a wider array of products — such as microfinance loans, gold loans, and daily, weekly and bimonthly payment processes — to help determine creditworthiness than the U.S. uses.
The U.S. has issued 10 million visas and green cards in the past five years to people with prime and super-prime credit ratings, Milsten said. That, she said, is untapped meaningful growth potential.
"Credit behaviors don't change when people move across borders," Milsten told American Banker. "If you exhibited strong credit behavior in one market, the likelihood is that as you move through another market, you will behave similarly."
By clicking a box labeled "I don't have a credit history in the U.S." in Amex's online application, applicants can use a driver’s license, passport, green card or visa number to apply for a credit card.
Nova's technology considerably speeds the process on Amex's side. Before, if a credit-invisible person applied for a card, American Express would take the application offline for review and try to get enough information to make an underwriting decision, Milsten said.
Now, Nova's interpretation of home-country credit is sent through an application programming interface into Amex's online application system so the card company can make a quicker decision and issue a virtual card immediately.
"The process felt very different for the prospective applicants, and our ability to successfully extend credit was lower because we lacked the information that we have available to us now," Milsten told American Banker.
Milsten said at Money20/20 she thinks the effort will pay off. "Newcomers we support are more loyal and hold higher credit lines."
Other industry executives expressed optimism for cross-border credit.
"Consumer behavior varies from culture to culture," Jason Gross, CEO of Petal, said Sunday at Money20/20. "If you're measuring directly someone's ability to pay, there are aspects of that that are universal."