TomoCredit Raised $122 Million Helping Break Credit Poverty For 40 Million People

The credit card system has fallen victim to the apathy of the institution. Systems that once served a purpose have been long outdated and need a significant overhaul. Although credit spending growth is expected to stabilize in 2022, as consumers’ lasting embrace of ecommerce will push online credit card usage past $500 billion for the first time, more and more consumers are being denied credit cards. In 2020 alone, Bankrate showed that 21% of U.S. consumers had an application for credit rejected in the middle of the coronavirus pandemic because a credit card company, lender or landlord deemed their credit score too low. Also, it’s been shown that Blacks and Hispanics have a more difficult time receiving credit due to low credit scores.

Kristy Kim, founder and CEO of TomoCredit, has just raised $122 million in equity and debt in Series B funding to disrupt the age-long process and idealisms of the credit card industry. As a result, she and her team grew 1000% last year and are breaking the credit poverty cycle for the 40 million women, immigrants and other underserved communities who are denied credit. The company provides credit access to groups that are traditionally marginalized by FICO. There are never any fees or APRs, and the card is virtually immune to the current interest hikes.

“It is a credit card by-product, but it works as if it’s a debit card on a weekly timeframe,” Kim shares. “So with a debit card, you have to have money in advance to spend. With Tomo, you don’t have to have money in advance. However, we ask you to pay in full every seven days. So it’s like a hybrid between a debit card and a credit card. But, unlike debit cards, we help you build your credit history efficiently. So going back to my story, when I was in college, I didn’t know why people needed a credit score or why people use credit cards; I just thought that credit was dangerous. So I kept using the debit card... I want all young people to stop using debit cards and switch to the Tomo card; every spending contributes to your credit history in the U.S.”

Kim started her career in investment banking, covering the software sector under the mergers and acquisitions department. She marveled at learning from the founders deciding on a potential exit. However, even with a good-paying job, she couldn’t find an apartment complex that would rent to her or a lender to approve her for an auto loan. During college, she used her debit card rather than a credit card with the misconception that having an outstanding credit card balance is a negative thing, not knowing that as long as it’s paid off, a person builds up a credit score helping qualify for loans. Between her experience trying to qualify for a loan and working with founders, she decided she wanted to build out a company that helps marginalized individuals build up their credit scores by offering them credit.

“I wish I knew I needed a credit score,” Kim states. “I could have been prepared better while I was in college. That experience gave me the idea of TomoCredit. How can I help people like me start their credit-building journey as early as possible so they have it figured out by the time they graduate from college and don’t make the same mistake I made?”

In 2018, Kim quit her job and began working on Tomo’s concept in January 2019. Quickly, she secured investments from top institutions, including Morgan Stanley’s Next Level Fund and MasterCard, who recognized Tomo’s impact on helping younger generations reach financial freedom efficiently. Kim had a goal of signing 10,000 people in the first year. Instead, Tomo reached that number in the first few months and has continued to grow 77% month over month, with now over 2.5 million users.

As Kim continues to pivot in her career and expand Tomo, she focuses on the following essential steps:

• Define your end goal; be clear in your intentions and where you want to be in 20 years.
• Understand what your weaknesses are. Doing so won’t hold you back or limit your opportunities.
• Acknowledge which job environment you thrive in; that will help you make calculated decisions in your career.

“I didn’t know how difficult it would be to start a credit card company,” Kim concludes. “I didn’t fully think through the nitty gritty details, especially around the risk model and financing part. But I was so confident. I could bet my life that this is the right idea because I lived through this problem... There are so many students who are about to make the same mistakes as I did. For me, I was so sure about the idea that not knowing the details didn’t scare me that much. I just powered through it. I got so many nos in the beginning. I didn’t care much because I thought people would eventually come around once they saw the numbers.”