Fintechs tout credit-builder cards as a way to smooth out flaws in a credit-scoring system that, to some, makes little sense. Under normal circumstances, the only path to build a credit score is to borrow money. In other words: People need to take out loans to establish credit scores, but they need credit scores to be approved for loans.
“Consumers are getting a more comprehensive and enhanced credit profile,” Softley said, “and lenders are getting access to a broader swath of consumers who are eligible for their products and offers.”