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How about a simple game? I want to figure out if you are eligible for a mortgage or credit card. What number do you think I’m thinking of? It is the single digit that determines whether or not you can get a loan or a credit card, as well as your interest rate. It can also determine whether or not you are hired for a new job. To answer your question, a credit score is the answer. It is also known as a FICO score. This score is calculated by evaluating your financial life, including how much debt you have, whether you pay your bills on time, and whether you have had any previous bankruptcies. Lenders and credit issuers rely on these scores to determine whether you are a good credit risk. Insurance companies and employers, in addition to making other decisions, may ask for this data. As a result, credit scores have the power to affect your financial life in a positive or negative way.

Even if you feel like you’re at ease with a Behemoth business model, it might be time for a change. Two startups are seeking to revolutionize credit issuance. Tomo credit, which recently landed $121 million in new funding, has developed a no FICO credit card option. The company has created cards that rely on your cash flow rather than your credit history. It targets young people who might have jobs but no credit history. Tomo uses a third party to gain your banking info. The company makes a decision whether to grant an application and sets the credit limit after evaluating your income and spending. You will be issued a Mastercard brand card with no fees or costs if you are accepted. Tomo, however, connects to your bank account and deducts the amount of your purchases every week.

Rather than paying off your balance in full at the end of the month, your balance will be deducted from your bank account on a weekly basis. You won’t be able to get into debt on the Tomo card every month. You won’t be able to pay for large purchases late. If you’re late paying, your card will be frozen until the debt is paid, making it more of a charge card than a credit card. In October, X1 launched as another no Fico card. It’s also based on your income. As a result of X1’s FICO-free decision-making, X1 can increase your credit limit by up to five times as much as traditional FICO-based cards, according to CNN. Every purchase gives you reward points, and you can carry a monthly balance on the card as well. It can take weeks to get approved for the X1 card. You can first request an invitation to apply to get the X1 card, and the cards themselves are different.

While these cards are made of stainless steel, they aren’t completely free of credit bureaus, even though they claim not to use FICO scores. X1 pulls soft credit checks as a part of its credit score calculation. A soft credit check provides an overview of your credit history and usage, but it is not used as the deciding factor in issuing new credit. It also doesn’t negatively impact your credit rating the way a hard credit check might. Payments are reported to the three biggest credit bureaus by both cards as a result. That payment history will have a significant effect on your credit score in the long term, for better or for worse. Because of this, Tomo and X1 aren’t rejecting conventional credit cards entirely, despite what they claim.

What do you think of those new generation credit scores based cards? Let us know down in the comments.