Millennial Money: The credit-building road with alternative credit cards could be bumpy
So-called alternative credit cards from financial technology companies can offer you the opportunity to build credit when your options are limited, and they tend to lower or eliminate many barriers along that path
Getting a first or second chance to build credit with a credit card has been easier in recent years because financial technology companies have created alternative options.
These new cards often evaluate applications differently from traditional credit cards, with algorithms and proprietary methods that may put less emphasis on credit scores while looking at factors such as your income or bank account balances. Lower costs tend to be a hallmark, too: Some of these products advertise no security deposit, no annual fee and no APR.
“Many fintechs are really focused on offering products to people that otherwise would not qualify for them at a major institution,” says Nick Roberts, chief marketing officer at Grow Credit, a financial technology company based in California. “There is a lot of focus with certain fintechs to expand the market.”
But while many of these relative newcomers can indeed help you build credit, it’s worth noting that the journey might sometimes be bumpy as the company behind the card continues to scale.
