Nova Credit, a startup whose technology helps banks underwrite immigrants, is growing its auto finance and mortgage offerings.
The San Francisco-based company, which partners with such large institutions like American Express, allows institutions to pull foreign credit data to develop U.S.-equivalent scores for consumers.
“[Consumers] can access their credit history from their home country, and we give that into the hands of American Express and take them from rejection to approval,” said Misha Esipov, co-founder and CEO of Nova Credit.
With its proprietary software, Nova Credit Passport, the startup is solving a problem by offering credit to newcomers to the U.S. If a customer applying for a financial product has no U.S. credit history but does have credit history in a foreign market, Nova Credit can deliver that data to financial institutions through application programming interfaces (APIs). According to the company, it can access more than 1 billion credit histories in real time.
Nova Credit works with institutions including American Express, UN Federal Credit Union and the student loan company MPOWER Financing. The company inked a cooperation agreement with American Express in October, and at the time, reportedly received inquiries from several other large U.S financial institutions interested in the technology. Nova Credit pulls credit data from nine countries, including Kenya, India and Mexico. It plans to expand its capabilities to the Philippines, the Dominican Republic and Hong Kong soon.
Esipov said the 4-year-old company, which announced a $50 million Series B funding round Wednesday, has focused heavily on helping institutions underwrite for credit cards and student loans, but the new funding will help Nova Credit develop its auto loan and mortgage businesses. The money will also help the company hire new employees in product, engineering, business development, sales, legal and compliance.
“What we’ve done with tech is to show that the same [financial] ethics and values that exist in [immigrants’] home countries are [available] in the U.S.,” said Sarah Davies, head of credit risk and analytics at Nova Credit, in a recent interview with Bank Innovation. “There’s a lot of transparency in our data in our methodology.”
Kleiner Perkins led the investment, with participation from Canapi Ventures, Index Ventures, General Catalyst, Nyca Partners and Sound Ventures. The Series B round brings the total funding the company has raised to $70 million.
David Sica, a partner at Nyca Partners, said Nova Credit serves a need that isn’t being addressed in the market today. According to Sica, there are consumers coming to the U.S. with jobs and education, but they can’t access products like credit cards because their data is from a foreign market.
“Nova is really the piping in the infrastructure that enables financial services, fintechs or whoever to serve this demographic with the data they would need to underwrite,” Sica said.
Connecting U.S. newcomers to financial products is a growing industry. Startups like Deserve and Petal both offer card products to this customer segment, helping those with thin credit files enter the U.S. financial system. In addition, startups Remitly and Majority both launched banking products for immigrant communities last week.
For now, Nova Credit only works with financial institutions in the U.S., but the company has plans to grow partnerships with other global financial institutions in the coming year. The company generates revenue from fees partner institutions pay when they gain new customers.
In addition to growing its team and products, Esipov said the company wants to expand its geographic footprint. Nova Credit has an office in New York, but he said the company will expand to other markets with large immigrant populations, like Canada, Europe and the U.K. As for new office locations, Esipov said Toronto is a possibility.