Lenny users develop healthy credit histories sooner

One of the founders of a new credit line used the lessons he learned from his own early credit experiences to help thousands of Americans avoid the same fate.

Joe Bayen founded Lenny after having some all too common experiences with credit in his early college years.

Mr. Bayen attended the University of Miami on a track and field scholarship. Like many students he was approached by a credit card company offering a free t-shirt if he applied for a card. He did, without fully knowing the costs.

“It took me five years to repair my credit score and it left a seven-year mark on my credit report,” Mr. Bayen said. “I paid higher interest rates on everything.”

Lenny CEO and founder Joe Bayen

Lenny CEO and founder Joe Bayen

Mr. Bayen eventually improved his credit score after graduate school, and the lessons he learned formed the foundation of Lenny.

Billed as the first credit line that helps to improve your credit score, Lenny enables people to quickly borrow $50-$10,000 at rates beginning at 7.9 percent APR. It uses the credit line to teach responsible credit use by providing bill payment alerts, suggested payment amounts designed to keep credit utilization below 30 percent, personalized product recommendations to complete a user’s financial profile, and credit education opportunities.

Users further benefit from the reporting of on-time payments to major credit bureaus.

Mr. Bayen said it was a group effort to take Lenny from an idea to its spots at the 2016 SXSW Fintech Showcase and as a 2016 finalist in the Financial Solutions Lab.

Chief Compliance Officer Francesco Matteini has more than a decade of experience designing compliance systems and obtaining regulatory approvals for novel financial products, including a broker-owned social media platform for trading and investing. After helping launch TradeKing and Zecco, Mr. Matteini helped merge them into the sixth largest online broker  in the country.

lenny logo

“He helped craft a solution that worked fine from a regulatory standpoint,” Mr. Bayen said. “We have amazing and talented people that over the last 18 months took Lenny from product to market at SXSW.”

Lenny employs non-traditional data, including LinkedIn profiles, alongside more traditional means to assess risk, Mr. Bayen said. Only soft credit inquiries are made.

For many Lenny users, the process of building good credit begins in college when Lenny starts them with smaller credit amounts. As they repay those, their amounts increase. Should the success continue, they graduate with a demonstrated repayment history.

That is important because graduates often find their credit problems remain when they finish school, Mr. Bayen said. They may work for a major company, earn a great salary and have great earning potential but their existing history, when viewed through traditional metrics, says they are a risk. Say hello to higher interest rates and increased difficulty getting a mortgage, buying a car, and even renting an apartment.

Lenny employs non-traditional data, including LinkedIn profiles, alongside more traditional means to assess risk, Mr. Bayen said. Only soft credit inquiries are made.

One of 2016’s dominant themes is the increased talk of regulation of the alternative finance industry. Fueled by the trouble at Lending Club, the calls for more scrutiny are being made around the world.

Mr. Bayen welcomes that regulation.

“The way our company is structured is to be fully compliant with regulations. We are not trying to take advantage of our customers.

“If you help the group we all do better. Transparency is paramount. The audience knows exactly what they are getting into .”

The Lenny app is available on iTunes.