US Fintech Raises $15 Million to Improve Credit Scores

• Fintech StellarFi, which helps people improve their credit scores, just raised $15 million.
• The startup collects customer debts, repays them on time and reports them to credit bureaus.
• Check out the 10-slide deck StellarFi used to raise the Series A round below.

StellarFi, a fintech startup that helps people improve their credit scores, has raised $15 million in new funding.

The Austin-based startup, founded last year by ex-Marine Lamine Zarrad, connects to users’ bank accounts, pays regular bills and monthly loans on their behalf, then reports those payments to credit bureaus.

Paying off debt on time each month is designed to boost users’ credit scores that are otherwise improved by using high-interest loans or expensive credit cards, according to Zarrad.

An estimated 150 million Americans have credit scores below 680, the lower end of what is classified as “good” credit, preventing them from accessing lines of credit and low-interest loans that Zarrad actually calls “subprime.” Users can pay $4.99 a month for StellarFi’s subscription or $9.99 a month for the “Prime” plan.

Zarrad said the company could save users who make $150,000 a year “thousands of dollars annually” by improving credit scores and opening up access to better rates.

“We’re in the business of credit building, not repair, that’s a big market where we currently stand alone,” he said.

StellarFi’s alternatives include 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 reached $2 million in ARR already.

Despite that, funding was challenging and was “difficult and longer than expected.”

“Most investors are moving away from DTC (direct-to-consumer) plays because a lot of consumer fintech doesn’t make money,” Zarrad added. “Investors treat companies with a double standard of expecting the same growth rates as in the past, but with profitability or a path to profitability at the same time.”

StellarFi raised a $7.2 million seed round in March 2022 and has now raised $15 million in Series A funding in a round led by Acrew Capital. Funding also came with participation from Trust Ventures, ATX Venture Partners, Dream Ventures and more.

The new funding will go toward scaling out the company’s business model as it looks to head toward “phase two.”

“We are moving fast and this is a great environment to hire with many people looking for their next opportunity,” Zarrad said. “We’re going on a pretty aggressive hiring spree, especially in engineering, product and marketing.”

Check out StellarFi’s 10-slide pitch deck below: