TomoCredit Raises $122M for No-Fico Credit Product Expansion

Credit card lending platform TomoCredit on Thursday (July 21) closed out a $122 million fundraising round that includes both equity and debt that will be used to expand the company’s No-Fico credit products, according to the company press release.

Morgan Stanley’s Next Level Fund, MasterCard and debt from Silicon Valley Bank led TomoCredit’s funding effort. The round for the female immigrant-founded company was oversubscribed by FinTech investors and culture funds including GoldHouse, Asian Hustle network and Hyphen Capital.

“As a first-generation South Korean immigrant, I wanted to help immigrant communities to reach their American Dream faster with TomoCredit,” said Kristy Kim, TomoCredit founder and CEO, in the company press release. “It has been wonderful to partner with minority-focused funds who truly understand Tomo’s mission.”

TomoCredit’s proprietary underwriting algorithm — dubbed Tomo Score — has identified high-potential borrowers without a credit score and seen market demand for its first product, the TomoCredit card, which requires no credit check, no deposit, no APR and no feeds, the press release said. The company grew 1000% in revenue.

TomoCredit plans to use the fresh capital to expand its credit product offerings, including auto loans and mortgages with its underwriting solutions.

“We decided to add more capital for two key reasons,” Kim said. “First, we were seeing incredible organic demands in the past two years, and we wanted to hire top talent to keep up with that organic growth. Secondly, we want to take full advantage of the newest consumer trends of avoiding high APR products.”

Related: Tight-Fisted US Consumers Sit on $3.3T of Untapped Credit Card Lines

Meanwhile, U.S. consumers are sitting on about $3.3 trillion of untapped credit card lines as interest rates hit historic levels and the Fed is mulling an interest rate increase of up to a full point next week. Earlier this month, the Philadelphia Federal Reserve said in its quarterly report on large bank credit cards and mortgages that “customers are utilizing less of their available credit lines.”

In fact, as the Fed noted, credit card balances are 11% below the levels seen at the end of 2019, just before the COVID-19 pandemic hit. Data shows U.S. consumers have about $3.3 trillion in available credit card credit. Perhaps not surprisingly, mortgage originations at large banks, as measured in volume, was off 28% in the first quarter of 2022, year over year.