TomoCredit releases underwriting tool based on cash flow
TomoCredit rolled out its latest tool last week aimed at expanding credit accessibility for millions of Americans.
The fintech startup — which began because of experiences of trying to secure auto financing — introduced TomoScore, which TomoCredit said is an innovative cash flow-based credit score that can provides finance companies and lenders a “risk-free” way to identify high-quality applicants with limited or no credit history.
TomoScore is an underwriting model that utilizes real-time, cash-flow based performance data as an alternative to traditional credit scores.
By monitoring the cash flow attributes of those considered “credit invisible” — including new U.S. citizens without prior credit history, small and medium-sized business owners, students, and other young adults who demonstrate sound financial practices — the company said TomoScore can give clients a “proven” method to evaluate and acquire mid- to high-income borrowers while keeping default rates better than industry averages.
Founded in 2019 by Kristy Kim and now backed by several investors including Morgan Stanley, Mastercard, and Barclays, TomoCredit said it has enabled 3.5 million individuals to access credit.
Kim recounted her experience with auto financing as part of why she started TomoScore.
“Our current credit bureau system is outdated and prescriptive, presenting large hurdles for millions of consumers,” Kim said in a news release. “I experienced this difficulty firsthand when as an immigrant and a recent college graduate with no credit history, I had to pay cash for a car because I faced multiple auto loan rejections. While I was fortunate enough to have the funds to make that purchase, not everyone is in the same financial situation.
“TomoScore solves that problem by providing lenders with a way to identify high-quality borrowers, even if they lack a traditional credit score, by evaluating real-time cash flow attributes that other credit rating methods overlook,” Kim continued.
TomoCredit board member John Suh added, “The Tomo team understands the ‘cash rich, credit poor’ customer segment better than anyone else operating in the space.
“Despite having a wealth of bank transaction data, this community of upwardly mobile and highly educated individuals has historically been ignored by U.S. financial institutions. Tomo’s B2B expansion — starting with the TomoScore — is going to change that by providing a host of new products and services for them,” Suh went on to say.