When deciding whether or not to approve a person for a credit card with a low-interest rate, a person’s credit score will typically be more significant than other elements of their financial profile. As a result, individuals with low credit scores but stable incomes, such as recent college graduates and new immigrants, were denied access to credit cards that would have better met their needs.
Tomo was made to solve this problem because it doesn’t look at a person’s credit score. Instead, applicants tell Tomo about their bank accounts, savings accounts, and other assets. This helps Tomo determine how creditworthy they are and how much credit they can give them if accepted.
Tomo differs from other cards in this category because it doesn’t charge interest. However, you must still pay off your entire balance every billing cycle, or your account will be temporarily blocked.
This implies that you can’t run up a debt and then pay it off over time, as you can with a regular credit card. You’ll need to evaluate whether or not a charge card-like structure is suitable for your spending habits.
5 Facts You Should Know About the Tomo Credit Card
TomoCredit does not do a credit check, in contrast to most typical credit card issuers. Instead, the company’s software considers your income (or what you think your payment will be) and the amount of money in your account. The issuing bank will use this information to decide if you meet the requirements to get the card.
The Tomo Credit Card is similar to other traditional credit cards in that they may use alternative underwriting strategies that are not directly related to a consumer’s credit history. Yet, this doesn’t imply that everyone should have this card.
Here are five essential features of the Tomo Credit Card.
1. No credit check is required
Applying for this card will affect your credit scores differently than applying for a regular credit card would. As an alternative, TomoCredit claims it evaluates many factors. Financial resources and their management are one such factor.
According to Kristy Kim, CEO and co-founder of TomoCredit, the system takes into consideration a variety of information, including your phone number, email address, the channel used to sign up for the card, the balance in your bank account, the quantity and consistency of your income, and any red signals.
TomoCredit needs you to connect at least one account through Plaid, an external service, to get this data. Any financial account that meets the criteria may be linked, including but not limited to savings, checking, investment, and retirement accounts.
According to TomoCredit’s website, the firm does not keep or have access to your banking credentials in any way.
2. No annual percentage rate (APR) since you can’t carry over a balance
Interest and fees are both waived with the Tomo Credit Card. TomoCredit, on the other hand, profits from “interchange fees,” or the premium the retailer must pay when your credit card is used to pay for anything.
It is impossible to incur debt with the Tomo Credit Card since you cannot carry over your balance from one month to the next. Another option is to set up automatic payments once every seven days. Every week, the amount necessary to cover the debt will be taken from your bank account.
Credit usage (a measurement of how much of your available credit you’re using) is a crucial element in determining your credit score. Therefore, it’s essential to make payments on time. Your payment history is sent to the three central credit agencies: Equifax, Experian, and TransUnion. These organizations gather the data needed to determine your credit score.
To avoid having your card canceled and your credit score dropped, timely payments should be made regardless of late penalties or interest. Late payments may still result in adverse credit reporting and collection actions.
3. The available credit limit is substantial.
TomoCredit lets you borrow up to $10,000, but this amount depends on several factors during the screening process. If you make your first payment on time, the creditor may decide to increase your available credit.
Because you cannot maintain an outstanding amount on your Tomo Credit Card, a large credit limit is of little practical use. Credit use will be kept to a minimum.
4. Monetary bonuses and other benefits.
Cardmembers will get various benefits, including three free months of DoorDash DashPass, a $5 monthly credit for use on DoorDash, and savings on services like HelloFresh.
As a bonus, you’ll receive a 1% return on all purchases made with your card, which is lower than the norm for standard credit cards but on par with other cards in this category.
5. You could be eligible even if you don’t have an SSN
The Tomo Credit Card is available to those new to the U.S. who wish to begin establishing credit. An application without an SSN or ITIN may be considered case-by-case. This functionality is still uncommon among credit cards.
Who Should Get a Tomo Credit Card?
Anyone with a low credit score or no credit history might benefit from a Tomo credit card. Moreover, Tomo is an attractive choice to avoid paying an annual fee or interest.
Tomo’s automatic payment features and real-time reporting to credit bureaus make it an excellent choice for anyone aiming to raise their credit score. You may manage your money however you choose with this card.
You may still apply for and get approved for the credit card even if you do not have a Social Security number. Because of this, the card may be used by people who are not Americans.
Final Thoughts on Tomo Credit Card
The Tomo Card is a prepaid debit card that helps you develop credit and avoid debt without requiring a credit check, an annual fee, or an interest rate in exchange for linking a bank account.
For people who want to build credit but don’t want to carry a monthly debt, TomoCredit, a company in San Francisco, created the Tomo Credit Card. Unlike many cards in this category, there is no annual charge, security deposit, or interest rate.
When used responsibly, every credit card may help you establish credit. This mainly involves staying within your credit limit and completing all payments on schedule. Because you can’t run up a debt on a Tomo Credit Card, its users are incentivized to pay their bills on time and limit their spending.
Is the Tomo Card available to those who are not U.S. citizens?
Yes. But you need a valid photo ID from the government, an SSN, or an (ITIN).
How much credit can I get on my Tomo Credit Card?
Tomo gives you a choice between $100 and $10,000 in credit limits. The information about your bank account and other characteristics will be used to establish your credit limit.
What factors go into determining a credit score?
The three credit reporting agencies (TransUnion, Equifax, and Experian) use scoring algorithms that consider your credit history, payment history, number of credit accounts, credit usage, and debt load to create your credit score.
What is credit utilization?
Your credit utilization is the proportion of your overall credit limit that you are using. You might hurt your credit ratings if you charge up to your limit. Your scores will benefit if you keep your usage rate around 30%.
Is it a good idea to apply for a Tomo Credit Card?
The Tomo Credit Card allows you to establish or repair your credit history without providing proof of income or requiring a down payment. It’s essential to look around and see what else is out there to ensure it’s the best match. Some cards let you earn rewards while still avoiding a monthly fee.
Is the Tomo Card good for me?
Tomo will not check your credit when you apply. Responsible card use and timely payments can help you establish a good credit history since the card issuer will record your payments to credit agencies. Nevertheless, if you’re late with a payment by 30 days or more, your account may be suspended until you settle the outstanding sum.
Does the Tomo Credit Card offer a 1% cash-back rate?
Before this change, the Tomo Credit Card* only returned 1% of your initial purchase price in cash. In any case, as of July 2022, the rewards program was closed to new participants.