The startup pools customer debts, repays them on time, and reports them to credit bureaus.StellarFi, a fintech startup that helps people improve their credit scores, has raised $15 million in new funding.
Paying the debt on time each month is designed to boost users' credit scores which are otherwise improved using high-interest loans or expensive credit cards, according to Zarrad. Zarrad said the company could save users who earn $150,000 a year"thousands of dollars annually" by improving their credit scores and opening up access to better rates.
The alternatives to StellarFi comprise credit cards with high-interest fees and secured loans that create"synthetic" credit relationships with customers, both of which come at a premium, according to Zarrad. The startup launched its product in January 2022 and claims to have hit $2 million of ARR already."Most investors are moving away from DTC plays because a lot of consumer fintech is not making money," Zarrad added.