Grow Credit, a financial inclusion platform that helps subscribers to services like Netflix, Spotify, Sprint, Tinder, Blue Apron and Verizon build credit, has closed its seed round. Launched last July, the minority-led company raised $2 million in funding from investors including Mucker Capital; Jason Robins, CEO and founder of Draftkings; Sebastien Deguy, vice president of 3D at Adobe; and Ronnie Lott, an NFL hall of famer and Super Bowl champion.
“In the current market environment, more consumers than ever will need to build or rebuild their credit score,” said Joe Bayen, Grow Credit CEO and founder. “That is why we are thrilled that the Mucker team has embraced our vision to create a more inclusive society, through our financial inclusion platform.”
When launched last summer, Bayen told TechCrunch, “We have been able to transform a healthy, positive habit, which is making subscription payments, and we have turned that into a credit-building opportunity.”
Here is how Grow Credit works:
- Users set up an account for free by connecting their bank account with a Grow Credit interest-free Mastercard. They must provide the bank account information, a valid email address and social security number, be a valid permanent resident of the United States with a physical address in the U.S., and they must be at least 18 years old.
- Users then use their Grow Credit Mastercard to pay for their existing subscriptions and look for new ones.
- The balance on the Mastercard varies, based on the plan (see below) selected. It must be paid in full every month through electronic (ACH) payments from the subscriber’s bank account.
- Grow Credit reports on-time payments to the Equifax and Experian credit bureaus to help users establish or improve their credit scores. Grow Credit reports users’ account balance and repayment history to the credit bureaus at the end of each month. It can take 60 to 90 days for this information to be reported to the credit bureaus.
- There are no hidden fees, and no credit is required. Grow Credit will run a soft credit check for identification purposes when users apply for an account.
Essentially, what happens is Grow Credit is providing small loans and lines of credit, which consumers then repay at the end of the month. Grow Credit makes money on two of the three tiers of the plan and by allowing subscription services like HBO Now, Pandora and PlayStation to upsell to subscribers.
There are three plans available, ranging from a free account and $9.99 per month.
There are some limitations, however:
- Grow Credit determines which subscription companies are qualified to be part of the program.
- Grow Credit is currently available in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Kansas, Kentucky, Maine, Massachusetts, Michigan, Mississippi, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
- Late payments are reported to the credit bureaus too.
Erik Rannala, founder at Mucker Capital, commented on his company’s investment in Grow Credit.
“Grow Credit levels the personal finance playing field for regular, everyday people and creates a more comprehensive view of a consumer’s credit. When people pay their cellphone bills or their Netflix bills on time every month, why shouldn’t that be reflected positively on their credit? We couldn’t be happier to support Joe and Grow Credit standing up for consumers to help them build a stronger financial future for themselves and their families,” said Rannala.
When TechCrunch first reported on Grow Credit in July 2019, they called the service “a pretty elegant way to solve a problem.” We completely agree. Grow Credit is marrying subscription payments with the need to establish or grow credit. This is ideal for those just starting out who need to develop credit, as well as those who have made a few credit mistakes along the way.
On the consumer side, it helps package subscription payments into one bundle, making it easier for consumers to keep track of their outgoing expenses. On the subscription side, Grow Credit has multiple revenue streams, and subscription companies gain visibility and access to prospective customers.