Behind the Idea Fintech North America

Behind the Idea: Nova Credit

More than one million immigrants arrive in the US every year, yet a lack of domestic credit history means millions of recent arrivals appear only as no-file or thin-file when applying for financial services.

Nova Credit is a company that partners with credit bureaus around the world to deliver real-time international credit data to credit card issuers, lenders, property managers, telecommunications companies and other service providers in the US. Recently, the company announced new details for its ongoing partnership with American Express to provide expanded credit access to people who have moved to America.

The growth of this digital capability enables newcomers from nine countries to use their international credit history to quickly and easily apply for personal American Express Cards and begin building US credit history, if approved. Typically, credit history is stopped at the border, preventing many people who moved from being able to obtain consumer credit. This integration has already helped thousands of newcomers access their credit reports and get approved for cards — opening a lot of new doors and providing them with the foundation they need to build the credit history that can ensure a strong financial future.

Misha Esipov is the co-founder and CEO of Nova Credit, known for unlocking financial opportunities for those historically excluded from the credit system.

What has been the traditional company response to financial technology innovations nationally?

Innovation within the world of fintech has traditionally focused on helping financial institutions serve customers through new and more convenient ways. While that is still a significant part of the industry, there is a growing shift to focus more on the needs of consumers. As a result, companies in this space are constantly looking to find new and innovative ways to better serve consumer demographics that are underserved by the current system. Additionally, more traditional industries are now broadening their horizons to adopt fintech solutions that let them access new audiences. For example, lending institutions and industries, such as residential real estate, that rely on credit checks for customers value alternative solutions that translate international credit data to a US-equivalent score because this helps them access a consumer group that was previously primarily closed off to them.

How has this changed over the past few years?

Further investments in the immigration tech space have launched a whole new sector of “immitech” companies that focus on making the immigration process more manageable and less daunting for those looking to move to the US. For fintech companies looking to serve this growing community, this has opened up a huge opportunity to address the obstacles within the industry from a systemic level and develop technical innovations that can help newcomers thrive financially upon arrival.

Is there anything that has created a culture of change inside the company?

Our team has a deep commitment and motivation to create systemic change because many of us (or our families) have experienced firsthand some of the challenges we help solve as a company. For example, when my family immigrated to the US, we quickly realised how difficult it was to build a financial life without a credit history. For instance, we lived our first year in upstate New York without a car because we could not obtain auto financing due to our lack of credit. Finally, after a year of saving, my parents purchased their first car – a white Honda – for $2,000 in cash.

Many other team members have similar stories that create a deep-rooted culture of change inside Nova Credit. Our team prides itself on our diverse backgrounds, and our workforce embodies our mission to power a fair and inclusive financial system for the world. As of 2021, 77 per cent of our workforce is composed of people who identify as first or second-generation immigrants. As we grow as a company, we strive to keep our mission front and center and create a workplace where people of all kinds can work to create a better tomorrow for generations to come.

What fintech ideas have been implemented?

For Nova Credit, our vision is to drive systemic change in the way immigrants access financial products. Currently, all newcomers to the US are rendered “credit invisible” upon arrival so even if they have a good credit rating in their prior home countries, they often struggle to accomplish the most basic tasks that require credit checks such as getting housing, a cell phone plan, a student loan or a credit card. This requires all newcomers to rebuild their credit history to its previous levels, which unfortunately can take years. Nova Credit’s core innovation — a US-equivalent global credit scoring and reporting format, the Credit Passport– helps remove these bottlenecks for newcomers. Similar to a US credit report, it contains a FICO-like score, tradelines and inquiry history, allowing consumers to demonstrate their creditworthiness to lenders and unlocks financial opportunities for those historically excluded from the credit system.

What benefits have these brought?

Our solutions have helped tens of thousands of immigrants establish the financial foundation they need to make the immigration journey less vulnerable. The real-time delivery of this data also enables banks, lenders, and telecommunications companies—including partners like American Express, the United Nations Federal Credit Union, and MPOWER Financing—to instantly serve immigrants faster and more fairly.

Do you see any other industry challenges on the horizon?

There is a large opportunity for decentralised lending around the globe to use consumer-permissioned credit bureau and alternative data. The space is in the very early stages of development, but we’re excited to watch this area and find ways to support financial access for underserved communities worldwide.

Can these challenges be aided by Fintech?

As no-file or thin-file credit holders, immigrants often must rely on fintech services for alternative paths to achieve financial parity. As we touched on earlier, I expect that next year, fintechs serving the immigrant population, also known as “finnigration” or “immitech,” will be an important space to watch. With the Biden administration signalling support to increase immigration through the US Citizenship Act of 2021, we will likely see a renewed focus on technologies and services that serve the immigrant community in the new year.

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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