Having good credit is important. It can help you sign up for a good credit card, purchase a home or even buy a new iPhone. But almost 100 million Americans have a subpar credit score of 600 or lower, or don’t have a credit score at all, according to data from the Financial Health Network.
Building a better credit score takes work, so Self built a business to help. The Austin-based startup offers a credit builder account, which is essentially a small installment loan designed to help people build a positive credit history.
The business model has proved to be successful for Self, and now the company is raising new money from investors to help it grow. On Wednesday, the company announced the closing of its $20 million Series C, which was co-led by Altos Ventures and Conductive Ventures. Silverton Partners, a VC firm that invested in Self during its Series A and Series B rounds, also participated in the latest funding round.
“Our goal from the beginning was to create a mission-driven company that gives the power back to consumers and helps them achieve their financial goals,” James Garvey, Self’s founder and CEO, said in a statement. “We’re thrilled that with Conductive Ventures’ investment, and the continued support from Altos Ventures and our ongoing investors, we can impact so many more consumers on their journey to financial wellness and stability.”
Here’s how Self's credit builder accounts work: Once someone applies for and receives the loan, the money is held in a certificate of deposit (CD) account for 12 months. Then, people pay off the loan at a monthly rate that fits their budget. When the loan is fully paid off, the money in the CD goes to the borrower and those monthly payments roll up into the person’s credit history.
The company has over 500,000 customers and $400 million in CD-secured loan originations. It also recently launched the Self Visa credit card, a secured credit card that doesn’t require a credit check and allows users to build their security deposit through monthly installments.
This new funding will help Self hire more employees, specifically for its marketing and product development teams.