100M Americans have bad credit or no credit at all. This startup will fix that. | Summary and Q&A

TL;DR

Empower is a startup on a mission to help everyday Americans access credit and build positive credit history without considering credit scores or requiring security deposits.

Key Insights

• ❗️ Your credit score can significantly impact your ability to borrow money, find employment, lease a car, or buy a house, dividing Americans into two categories of worthy and unworthy.
• ❗️ Over 100 million people in the US lack access to affordable credit, and more than 60 million have credit scores below 700, making it difficult for them to access credit and build positive credit history.
• 🌍 Providing access to credit is critical because it promotes social mobility and prosperity, allowing individuals to invest in education, start businesses, and improve their lives.
• 💸 Empower, a startup founded in 2016, aims to help everyday Americans access credit and build credit history, without relying solely on credit scores or requiring security deposits.
• 🔍 The credit score system, introduced in the US in 1989, was created as a way for lenders to assess credit risk and determine credit terms, including interest rates.
• 📊 Millions of Americans are credit invisible or unscorable, with approximately 45 million people being credit invisible and 34 million finding errors on their credit reports, which can have implications beyond lending, affecting rental applications, car insurance, and job applications.
• 💼 Empower's impact is disproportionately felt by minorities and women, providing them with access to credit for essential needs and reducing financial hardships.
• ⚖️ The credit system's limitations and inaccuracies make it challenging for many people to obtain affordable credit or any credit at all, highlighting the need for alternative underwriting methods.
• 🚀 Empower aims to democratize access to fair credit by using banking and payroll data, as well as digital wallets, to score individuals and provide instant access to capital, promoting financial freedom and changing trajectories.
• ✅ Empower's rich insights, machine learning capabilities, and universal payment rails contribute to their ability to assess an individual's financial responsibility more accurately, giving more people a fair chance at obtaining good credit.

Transcript

Read and summarize the transcript of this video on Glasp Reader (beta).

Questions & Answers

Q: Why is access to credit important beyond the ability to borrow money?

Access to credit is essential for various aspects of life, including renting, car insurance, and job applications. Without credit, individuals may face difficulties in these areas, limiting their opportunities.

Q: How does Empower differentiate itself from traditional credit agencies?

Unlike traditional credit agencies, Empower doesn't consider credit scores or require security deposits. Instead, they use alternative underwriting methods and digital wallet data to assess an individual's financial responsibility.

Q: Who are the primary beneficiaries of Empower's services?

Empower's services are disproportionately beneficial for minorities and women, who are often excluded from the traditional credit system. Over 60% of those using Empower are women.

Q: How does Empower plan to expand its services internationally?

Empower aims to underwrite the next billion people internationally by leveraging new banking and data sources. With real-time underwriting capabilities and financial rails, they can provide instant access to credit.

Q: Why was Empower founded?

Empower was founded after the 2008 global financial crisis, inspired by the founder's parents' experience of losing a significant portion of their net worth. The goal was to provide access to good financial advice and empower individuals to make informed decisions about their finances.

Summary

In this video, the importance of credit scores and the impact they have on people's lives is discussed. It is acknowledged that credit scores can determine an individual's ability to borrow money, secure housing, obtain employment, and even lease a car. Empower, a startup founded in 2016, aims to help everyday Americans access credit and build positive credit history without relying solely on credit scores or requiring security deposits. The video emphasizes the significance of democratizing access to fair credit and highlights the limitations and inaccuracies often associated with the traditional credit system. By utilizing banking data, payroll data, and digital wallet information, Empower is able to score individuals and provide them with access to credit, promoting social mobility and prosperity. The video concludes by emphasizing the transformative power of software in shaping financial futures and the importance of empowering individuals with access to good financial advice and information.

Questions & Answers

Q: How many people lack access to credit in the US?

Over 100 million people in the US lack access to credit.

Q: How many people can Empower underwrite who currently don't have access to credit?

Empower can underwrite approximately 50 million people who currently lack access to credit, elevating them into the financial system and providing a way to build their credit score.

Q: Why is building a credit score important beyond accessing credit?

Building a credit score is important for various reasons, such as the ability to rent, obtain car insurance (in certain states), and even for job applications in many states.

Q: When was the credit score first introduced in the US?

The credit score was first introduced in the US in 1989 by a company then known as Fair Isaac and Company, also known as FICO.

Q: What are the three main national credit bureaus in the US?

The three main national credit bureaus in the US are Experian, Equifax, and TransUnion.

Q: What percentage of Americans are either credit invisible or unscorable?

Approximately 45 million Americans are either credit invisible or unscorable, meaning they do not have a credit report or credit score.

Q: How many people have found errors on their credit report?

About 34 million people have found errors on their credit report.

Q: What are the implications of having a high credit score?

Having a high credit score increases the likelihood of accessing credit in larger amounts and at a lower cost.

Q: Who are most impacted by the lack of access to credit?

Currently, disproportionately affected by the lack of access to credit are minorities and people of color. Additionally, over 60% of Empower's users are women.

Q: How does Empower's service benefit individuals in their daily lives?

Empower's service provides individuals with immediate access to credit, which can help them overcome urgent financial challenges, such as being able to afford fuel or groceries for their family.

Q: Why is providing access to credit critical?

Providing access to credit is critical as it promotes social mobility and enables individuals to invest in their education, start businesses, and improve their financial well-being.

Takeaways

The video highlights the importance of credit scores and the impact they have on individuals' lives. It emphasizes the limitations and inaccuracies of the traditional credit system, which leaves millions of Americans without access to affordable credit or any credit at all. Empower, a startup, aims to democratize access to fair credit by underwriting individuals based on banking data, payroll data, and digital wallet information. This approach enables more people, including those who are credit invisible or unscored, to have a fair shot at obtaining good credit. Empower's mission extends beyond the US, as they strive to underwrite the next billion people internationally. Overall, empowering individuals with access to credit and financial information has the potential to transform their financial futures and promote social mobility and prosperity.

Summary & Key Takeaways

• Empower is a startup that aims to provide access to credit for everyday Americans, regardless of their credit scores or security deposits.

• The traditional credit system in the US often excludes millions of Americans who are either credit invisible or unscorable.

• Credit scores not only determine access to loans but also impact renting, car insurance, and job applications.