Thrifty Thinking: NetCredit

Did you know that the FDIC considers about 30 percent of American households to be underbanked? I had a chance to find out a little more about a site that aims to help these households, NetCredit. 

What does it mean to be "underbanked?"

NetCredit believes that everyone deserves access to simple and trustworthy financial services.  According to a recent FDIC study, 8.2% or about 10 million American households are unbanked, which means they have neither a savings nor checking account at a financial institution, and another 20.1% are underbanked, which means they have a bank account, but choose to use some non-bank financial services like check cashing services, payday loans, or pawn shop loans to meet some of their credit needs. NetCredit specializes in personal loans for consumers with less than perfect credit who either cannot qualify for a small loan from their bank or who simply prefer the convenience of our fast, online approval process.

What factors does NetCredit look at besides just credit score?

At NetCredit, we use various external reports and internal data points to calculate our own proprietary risk based underwriting model. Using multiple data sources to evaluate risk instead of simply relying on a FICO credit score, NetCredit is able to identify customers who qualify for a loan despite having less than perfect credit.

Many lenders pull a traditional credit score from one or more of the big three bureaus and set cut offs based on that score. For example, assuming that a lender establishes a 680 FICO score floor, the lender would eliminate access to credit for more than 1/3 of Americans,including those who do not have a credit history or lack sufficient credit history to calculate a FICO score.

How does NetCredit differ from traditional banks?

Unlike traditional banks, who typically offer checking accounts, savings accounts, mortgage loans, auto loans, credit cards, and a variety of other products, NetCredit specializes in just one thing: credit solutions for consumers with less than perfect credit who are looking to borrow $500 to $3,000. Because we focus on just one thing, we are able to better understand our customers' needs and offer
innovative credit solutions that are not typically available to these consumers at their bank or credit union.

How does NetCredit differ from other sources of credit, for example credit card cash advances or payday loans?

NetCredit offers personal loans that can be paid back over time in installments. Unlike cash advance products or payday loans, a NetCredit loan does not need to be paid in full on a customer's next
pay date. This allows our customers to take better control of their budget by paying back over time.