Built as responsible credit for the modern world, Petal is a relatively new financial start-up with a voque approach to credit. It is one of the only Fintechs deploying credit card institutions that does not rely solely upon credit scores to determine a person’s eligibility. In this post, we’re going to give you the skinny on Petal, a full review of its platform, and what you can expect if you opt to sign-up for its service.
What is Petal?
Petal is a credit-building startup that allows almost everyone to have access to credit cards regardless of their score or financial history. When you apply for a Petal account, the company MAY depend on your banking history but it doesn’t measure your creditworthiness based solely on it. It takes into account and analyzes other essential metrics, besides the FICO score, to create what it calls a “cash score.”
Traditional banks either approve a possible client or disapprove them based on credit scores — most of the time FICO scores. This oftentimes neglects a huge chunk of the population and leads to a sort of catch-22 scenario. In order to build a credit score, you first need a credit score.
About 21% of U.S. adults are generally denied financial products. Nearly 1 in every 5 millennials, despite not having any debt, find themselves unable to get a credit card simply because they lack any sort of credit history. Over half of Americans have one time or another been rejected for a credit card.
Petal takes into account that this number continually grows and then bets on the fact that the majority of the population needs a lifeline. It creates a much more independent, self-governing, egalitarian, and friendly metric — The cash score.
Credit scores don’t tell your whole history
Until recently your bank owned your banking score — and banking history. Let's say you wanted to switch banks, well, all that time you invested in creating good credit with your former bank wouldn’t come with you. To a degree, you’d once more have to start from point zero.
That’s no longer the case, today, thanks to modern tech and avant-garde legislation - put into place to better the consumer’s prospects regarding their credit - that is no longer the case. Your banking history belongs to you.
Also, at Petal, the company doesn’t just take into account your banking history, or for that matter your FICO score. Why? For multiple reasons. Today, thanks to tech, companies can analyze millions of data points — something traditional banks often overlook. Data points like income, savings spending history, debt, etc.
This is a crucial feature to highlight because in many cases, ordinary folks, particularly people who are just now starting their financial journey, lack a proper credit score.
Once you’re approved by Petal, you not only get a credit card, but the platform gives you all the right tools you’ll need to start creating a positive credit history — and track your progress and your potential score. This type of analytics can help individuals understand their financial habits, and improve their credit rating.
More than 40% of Petal's customer base, according to internal reports, is made up of individuals who were first denied a credit card by a bank.
History of Petal
Petal was founded in 2016 by Andrew Endicott, David Ehrich, Jack Arenas, and Jason Gross. It is an emerging unicorn that focuses on credit cards, financial services, FinTech tools, and machine learning. In January 2022, Petal managed to raise over 140 million USD in a Series D investment rush. Today, the company is worth 800 million dollars.
Its values, despite its rapid rise to fame, its values remain the same — make credit simple, accessible, and honest. Petal has promoted cash flow underwriting actions and encourages members to build credit, avoid debt, and create responsible budgets.
Investors in Petal include Tarsadia Investments, Valar Ventures, CUNA Mutual, Encore Bank, Volery Capital Partners, Gopher Asset Management, RiverPark Ventures, Afore Capital, and Gaingels.
Petal Cards
Today, Petal offers two cards. The difference?
Petal 2 is the premium card, offered to members with better cash scores or members that have already built history on the Petal platform.
Petal 1 meanwhile is your entry base card.
Both cards offer the following features:
- No fees.
- Tools to better your credit journey.
- Cashback at selected merchants.
- No foreign transaction fees.
- Google Pay and Apple Pay.
- Petal leap program: increase your credit line in 6 months by making on-time parents and keeping your credit score within the desired range.
- Access to the Petal mobile app — which gives you such tools as payment calculators; budget planning; cashback GPS that lets you track local merchants partnered with the platform; the ability to unsubscribe to services - like Amazon, Netflix, Spotify, etc - right from the app.
It’s important to note that unless you actively try to apply for Petal 2 card, the system will automatically consider you for Petal 1 — this is a much more easy card to qualify for; a good stepping stone if you’re just starting on responsibly using credit.
Petal 1
- No annual fee.
- Credit limit of $300- $5000.
- APRs: 19.99% to 29.49%
- Cash Back at selected merchants — 2% to 10%.
Although there are no annual fees, Petal 1 does have late payment fees and return payment fees if you don't meet your financial responsibilities on time.
Petal 2
- Cash Back at all merchants — 1% to 1.5%.
- Credit limit $300 to $10000.
- APRs: 12.99% to 26.99%
Petal 2 has a much more forgiving policy as it has no fees whatsoever and a much more amicable APR range.
