Sable: how an American startup helps immigrants create a credit history

The realities of life in the United States can be detrimental to an immigrant's pursuit of the American dream. In order for US banks to give you money, you need to have a good credit rating and history - all this is not available to a person who has recently arrived in the country. Seeing how immigrants struggled to access finance, Naveen Qureshi, Towers Wilen and Andrey Paul created the startup Sable, a platform for immigrants to help them get a credit history, says Yourstory.

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“We're solving the problem of access to credit for people who are new to America. US banks and fintech banks operate on legacy credit risk models that look at US credit history before extending credit to a customer. It takes years to build a credit history, and immigrants don't have one, so they aren't given money. Moreover, new immigrants also face challenges in opening bank accounts,” says co-founder and chief product officer Naveen Qureshi.

Other documents, such as a social security number, when people only move to the United States, are also not available to immigrants. A student may not be entitled to an identity card for 4 years or more.

Background History

Sable created a proprietary credit risk model—the first of its kind—to determine a customer's credit risk score without the need for a U.S. credit history, while keeping loan default rates below U.S. industry standards. In addition, Sable uses additional documents instead of SSN to verify identity.

Sable founders met at Columbia Business School in New York in 2017.

Naveen moved from Toronto to New York and, as an immigrant, was faced with problems in the US financial system. Her Canadian credit history did not help her south of the border. She met Andrei, who went through the same trials when he moved from Europe to study in American graduate school. They recruited Towers (the only American in the team). All three have corporate experience, and Naveen worked at Capital One before the startup. The trio spent several weeks talking with 300 immigrants to identify the problems they were facing, identify the targeted market, understand the rules, and evaluate revenue streams. Sable then began working with banks and alternative data service providers to create an underwriting model.

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According to Pew Research, more than a million immigrants came to America in 2016 alone. And they all needed to build their credit scores for different needs. Immigrants need a credit history in a variety of situations, from getting a phone plan and renting an apartment to getting a job or a mortgage, and everything in between. The founders say Sable opened the doors to immigrants to allow them to start on an equal footing with Americans.

“Our vision is to become a global bank and help immigrants move from any country to another with their financial needs,” adds Naveen.

Bank Model

Sable operates as an applicant bank, also called a start-up bank, which competes with the larger traditional banks in the field of retail financial services, with a full range of banking and credit products focused on immigrants. Sable is available on iOS for quick identity verification. Navin explains that within 5 minutes the user will have virtual debit and credit cards, which they can use immediately, waiting for the arrival of physical cards by mail.

Since immigrants do not have a US credit history, in addition to credit bureau data, Sable uses alternative proprietary data to determine each applicant’s credit risk and provides access to clients. According to Navin, an immigrant can register a bank account in the United States and a credit card without having to have a social security number, and even before moving to the United States. Startup offers an unsecured credit card with high credit limits and zero commission, a current account and benefits specifically designed for international clients, such as free international money transfers.

Sable went through the Y Combinator business incubator in the summer of 2019. The launch of the startup allowed Y Combinator to attract seed funding of more than $120. About his model, Naveen says, “Our current offerings are debit card (linked to current account) and credit card, so all our business models/revenue streams at this stage are credit economics and banking. We generate revenue through three streams: interchange fees, a percentage of every transaction the customer makes, and with the launch of the rewards card, we will earn a monthly fee for the rewards credit card.”

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Next Steps

By the end of 2018, the U.S. banking system had assets of $ 17,9 trillion and net profit of $ 236,8 billion. This sector supports the world's largest economy with the largest variety of banking institutions and a concentration of private loans anywhere in the world. The opportunities in the US economy are huge when it comes to customer service. Based on customer feedback and needs, the startup plans to release more products and features over the next 18 months.

“We have a pilot unsecured loan program running. With an unsecured loan, customers won't have to make a secured deposit and will receive higher limits than starter cards or secured cards. This will change the rules of the game. We have already received a lot of positive feedback,” says Naveen.

Sable will also launch an Android app. The startup does not want to disclose any financial information at the moment, but says that it competes with NovaCredit, CreditStack and Petal.

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