The Tomo Card, created by the San Francisco-based startup TomoCredit, is a credit card for people with no credit or bad credit (FICO scores of 629 or less) who want to create a credit history without having monthly credit. Unlike many cards that appeal to a similar audience, there is no annual fee, deposit, or even APR.
Image courtesy TomoCredit
Also in contrast to conventional credit card manufacturers – who usually a hard request TomoCredit never does a credit check when reviewing your application. Instead, the proprietary technology can weigh many data points, some of which are your income (or income potential) and your bank balance. The bank that issues the card, New York-based community Federal Savings Bank, will use this information to determine if you are a good candidate for the card.
In this way the Tomo card is similar to others alternative credit cards This can use unique drawing techniques that are not necessarily tied to credit scores. But that doesn’t mean that the card is suitable for everyone.
Here are five things you should know about the Tomo Card.
1. There is a wait
The application process is not as easy as with other cards.
You have to see if you are first pretested by providing your age, income and balance on the website. Pre-approval essentially means that the issuer will give you a “soft yes” based on the information you provide.
If you’ve been pre-approved, you can move on to the next step. The company will send you an email invitation to officially apply for the credit card. There may be delays here. According to Kristy Kim, CEO of TomoCredit, depending on the number of applicants, it can take up to several weeks before you receive the invitation to the official application.
Once you’ve submitted the official application and TomoCredit can review other data points, you will receive approval or rejection.
2. No credit check is required, but a linked bank account is required
Since your credit report will not be heavily burdened in your official application, it will not affect your credit report Credit scores just like a conventional credit card application does. Instead, TomoCredit examines a series of data points to determine eligibility. One of them is how much money you have and how you deal with it.
It uses various data points like your phone number, email address, the channel you signed up for the card through, the balance in your bank account, the level and stability of your income, and possible red flags, according to Kim.
To get this information, you need to link at least one TomoCredit account through Plaid, a third party provider. You can link a current account, a savings account, an investment account or another authorized account.
According to the company’s website, your bank account credentials are not saved and cannot be seen by TomoCredit employees. Plaid also encrypts the data for security reasons.
Nerdy tip: If you don’t want to link a bank account, a secured credit card could be an option. These cards can be ideal when you have poor or no balance. However, unlike the Tomo card, you need to leave a deposit up front – usually a few hundred dollars, depending on the card. You will usually get your money back as soon as you close or update the card, provided you have a good payment history.
3. There is no APR because you cannot carry any credit
The Tomo Card does not charge any fees or interest. Instead, TomoCredit makes money from it Exchange fees – a surcharge charged by the merchant when you use your card to make a purchase.
Unlike traditional credit cards, the Tomo card does not allow you to carry funds from one month to another, making it impossible to get into debt. You start off with a seven-day automatic payment plan. A payment is automatically debited from your bank account to cover the balance each week.
Frequent payments keep yours Use of credit low (a key factor in your credit scores) and help you borrow. Payments are reported to all three major credit bureaus: TransUnion, Equifax and Experian. These companies collect the information that is used to calculate your credit scores.
After about three months with the card, TomoCredit lets you move the payment plan to a more traditional cadence of once a month, Kim said.
Nerdy tip: Even without the risk of fees or interest, make payments on time to prevent the card from being frozen and affecting your balance. Accounts that are in default can still be reported to the credit bureaus and sent to collections, Kim says.
4. The credit limit is potentially generous and deserves rewards
Depending on the factors TomoCredit takes into account when underwriting, it is possible to obtain a credit limit of up to $ 10,000. Also, after you’ve made the first payment on time, there are times when your credit limit increases, Kim says.
Cardholders also receive a 1% Cashback Reward Rate, which is below average for traditional cards but competitive among cards in this class.
You can redeem rewards for bank statement balances.
5. You can qualify without a social security number
Newcomers to the US looking to build up credit can also qualify for the Tomo Card. If you don’t have a social security number or individual tax identification number, you can apply for one with your passport information, says Kim.
Likewise, these cards don’t charge an annual fee and earn rewards.