Chime Improve Millennials’ Credit Scoring with Pinch

Chime recently closed a funding round and explained they are investing part of this amount into buying out PinchRent, a scoring improvement service by the American start-up Pinch. Together, they will craft an offer based on this expertise.

Pinch was founded in 2016. They focused on helping their users build a credit history –especially Millennials– via reporting their monthly rent to credit bureaus. Over time, they can then improve their score: the amount of their rent is similar to a monthly credit instalment, and an indication that they can be trusted as future borrowers.

Based on Pinch’s expertise –whose service has been terminated– Chime helps these targets meet credit-related needs (90% of their customer base) with a new offer meant to improve their credit history. Pinch would, indeed, increase their scores from 10 to 100 points depending on their profiles. This improvement could concern more than 80% of the borrowers.

This investment seems to be consistent with Chime’s intend to reach out for credit and investment markets. Until recently, they described themselves as a mobile bank whose services were limited to a current account and PFM tools.

Comments – Chime, a fast developing credit industry player

Chime is one of the m-banking players in the US focusing especially on Millennials via addressing credit-related issues for them. They know these targets have been quite reluctant to trusting banks since the 2008 crisis. These generations are, still, affected by over-indebtedness (having to subscribe student loans). They use debit cards more which explains why they have trouble building good credit scores.

With this project, Chime and Pinch are improving their customers’ credit histories, and refining risk assessments. They relied on rent payments to design this solution. CreditLadder also bet on this market in the UK where they won Starling Bank, Metro Bank and the aggregation service Bud.

Ever since they closed their funding round, Chime has been quite successful: they registered 2 million account openings on the platform and more than 150,000 new accounts each month. This FinTech is aiming to process $10 billion in transaction volume by the end of the year.