Credit Card

What is a credit card?

Credit card or a charge card was invented over 70 years ago in the 1950s. Credit cards were first used at fancy dinner places where patrons don't have to whip out cash because it’s seen as not elegant and uncivilized. 

There are almost 600 million credit cards alone in the US and collectively we carry over 1 trillion dollars of credit card balance. It just shows you the popularity of this product and how important it is for banks and credit unions to understand the applicant's credit worthiness when they apply for a credit card.

Access to credit and market expansion

However, there are still millions of Americans who want a credit card but can’t get a credit card for a variety of reasons. There are specialized credit cards companies that provide credit cards for those that are still building or rebuilding their credit. 

The new-to-credit and the subprime credit card space is a thriving space where many credit unions are up and arms to compete with market share. Many fintechs are also in the running to originate credit cards with their bank partners.

Credit Card - Digital Onboarding

Credit card onboarding can be done completely online. There are many third party data providers such as identity verification bureaus to credit bureaus to triangulate the applicant’s identity as well as their credit worthiness.

The difference between a credit card onboarding process and a personal loan application is minimal. The application process will need to have all of the PIIs or personal identifiable information as well as some level of proof of income.

Banks and credit unions heavily rely on credit scores and credit bureau reporting. Those with low credit scores or new-to-credit immigrants and younger generations of consumers have a lot of challenges to get their first credit card.

However, many fintechs and specialized credit unions specialize in granting credit to those new-to-credit or those that are rebuilding their credit. They may use other types of data in addition to credit scores and credit reports as part of their underwriting process.

Credit Card - Underwriting

Credit cards are sometimes difficult to get. Banks and credit unions use very strict criteria to underwrite credit card applicants. Applicants almost have to have impeccable credit history and demonstrate utmost credit worthiness to get approved for a credit card.

Most Americans have multiple credit cards. Some credit cards are affinity based with different rewards systems that attract different types of consumers with different spending habits. However everyone must pass a slew of credit underwriting rules before obtaining credit.

LendAPI’s credit scoring engine is a powerful tool with a visual rules editor. This allows risk management professionals to build custom attributes or variables that enable the most complex credit underwriting rules.

LendAPI’s scoring engine also works with some of the industry's leading custom credit score building companies to calculate machine learning credit scores in real time with correct AA (adverse action) codes. These scores can be delivered by our scoring engine to be used in our visual decision tree editor or the scores can be made available through an API call.

Credit Card - Onboarding & Servicing

After a credit card applicant is fully approved, the digital onboarding system must be able to send an API call to the credit card servicing system.

FIS, Fiserv are some of the old guards of the credit card servicing and processing space. Their systems are embedded into some of the large banking organizations across the country.

The chances of a new fintech company or a regional bank having the ability to acquire a system of their own is a long shot. Many of the smaller banks and regional banks are leveraging larger banks with these systems in place to onboard their clients.

In other words, some of these banks that've been around for a long time are acting like a back-office bank for other banks with marketing and customers to be onboarded to their white labeled serving systems.

LendAPI has integrated with some of these large credit card serving banks and program managers to onboard these credit cards with all of these technologies in tow. So our clients can focus on marketing, branding, customer service and leave technology integration, card management such as producing statements to others like LendAPI and its integrated partners.

Credit Card - All in solution

If you want to explore an end to end solution, please go and register at our website www.lendapi.com and click on sign up. We have a 30 day no obligation free access. When you sign up, head on over the Product Builder under Settings and take a look at the credit card application. Tell us what you think at info@lendapi.com