Esipov said the founders of Nova Credit realized while attending Stanford graduate school that many international students were stranded by a lack of credit history in the United States. Even foreign banks doing business in the United States might find it difficult to provide loans to their citizens using credit information from their mutual home country.
Nova Credit helps immigrants transfer their “reliable financial identity” from abroad by calculating a US credit score based on information gathered from credit bureaus in other countries that collect similar data. The end result “looks like a regular credit report,” Esipov said.
Although Nova Credit is new to auto lending, it has provided international data on financing, such as student loans and credit cards, for years.
Esipov said Nova Credit quantitatively proved the hypothesis that a borrower’s credit history in their home country would be “highly predictive” of performance in the United States.
Nova Credit’s product has enabled lenders to automate decision-making for these international borrowers. And borrowers are able to get rates “representative of their true credit risk”, he said.
Last year, the Census Bureau estimated that the number of immigrants to the United States will reach nearly 54 million by 2030, up from 40 million in 2010. And immigration will replace births as the number one driver. 1 of population growth by 2030, estimates the agency.
Esipov called not lending to immigrants “a strategy to lose market share over time” given America’s changing demographics.