CreditVidya, a financial technology start-up that leverages non-traditional data sources to provide credit scores to individuals, has raised $2 million (Rs 13.3 crore) from venture capital (VC) fund Kalaari Capital, said a top company executive.
Additionally, the three year-old, Mumbai-based startup has received Rs 1 crore from Paragon Partners Managing Partner, Siddharth Parekh , an early backer of the venture in his personal capacity, as well as from a clutch of employees.
The investment will help the company expand its technology and data science team and strengthen its technology platform, said Abhishek Agarwal, co-founder and chief executive at CreditVidya.
The company uses non-traditional data sources such as the mobile phone recharge pattern of an individual, utility bill payments, e-commerce purchase behaviour etc. to provide a credit score for individuals who do not have a traditional credit score, said Agarwal.
“In order to give a credit score, the traditional credit bureaus have to rely on the repayment history of loans and credit cards. But if you have never taken a credit card or a loan earlier, then it’s very hard for a person to get a score and thus difficult to get a loan,” added Agarwal.
Currently most banks and other lending institutions rely on credit scores provided by credit bureaus such as CIBIL.
The start-up, founded in 2013, has tied up with several financial institutions such as Bajaj Finserv, Fullerton India and Shriram Housing Finance and gives these lenders the ability to score customers, minimize fraud rates and accelerate verification processes of potential customers.
There are about 350 million customers in the income bracket of Rs.2 lakh to Rs.5 lakh a year whom banks are unable to lend because they are “credit invisible”, said Raj, adding that a lot of potential customers that banks target on their digital platforms are young people who might be completely new to credit and thus lacking a formal credit score.
CreditVidya will use the funds to grow its team from the current 37 members to 70 by end of the financial year. The company has already doubled its team strength in the last two months, said Agarwal.