The Tomo Card, created by San Francisco-based startup TomoCredit, is a card for those with no credit or poor credit (FICO scores of 629 or below) who want to establish a credit history without carrying a monthly balance. Unlike a lot of cards that target a similar audience, there's no annual fee, security deposit or even APR.
Also unlike traditional credit card issuers — which usually conduct a hard inquiry when reviewing your application — TomoCredit never runs a credit check. Instead, the company's proprietary technology can weigh many data points, a key few being your income (or income potential) and your account balances. The bank that issues the card, New York-based Community Federal Savings Bank, uses this data to determine whether you’re a good candidate for the card.
In this way, the Tomo Card is similar to other alternative credit cards that can use unique underwriting techniques that aren't necessarily tied to credit scores. But that doesn't mean the card is right for everyone.
Here are five things to know about the Tomo Card.
1. There’s a waiting period
The application process isn't as straightforward as with other cards.
You’ll have to first see whether you’re preapproved by submitting your age, income and bank account balances on the website. A preapproval means, in essence, that the issuer is giving you a "soft yes" based on the information you provided.
If you’re preapproved, you’ll get to move on to the next step. The company emails you an invitation to officially apply for the card. This is where you may experience a lag. Depending on the volume of applicants, it may take up to several weeks for you to receive the invitation to officially apply, according to Kristy Kim, CEO of TomoCredit.
Once you submit the official application and TomoCredit can review other data points, you’ll get an approval or rejection.
2. No credit check is required, but a linked bank account is
Because there's no hard pull on your credit report when you officially apply, it won’t impact your credit scores the way a traditional credit card application does. Instead, TomoCredit says it looks at a number of data points to determine eligibility. One of them is how much money you have and how you manage it.
It uses different data points such as your phone number, email address, the channel used to sign up for the card, the balance in your bank account, the amount and stability of your income, and possible red flags, according to Kim.
To get this information, TomoCredit requires you to link at least one account through Plaid, a third-party service provider. You can link a checking account, savings account, investment account or another eligible account.
Your bank account login details aren't stored and aren't visible to TomoCredit employees, according to the company’s website. Plaid also encrypts the data for security purposes.
Nerdy tip: If you prefer not to link a bank account, a secured credit card could be an option. These cards can be ideal if you have poor credit or no credit, but unlike with the Tomo Card, you’ll have to come up with a security deposit upfront — usually a few hundred dollars, depending on the card. You typically get the money back once you close or upgrade the card, assuming you’ve maintained a good payment history.
3. There's no APR because you can’t carry a balance
The Tomo Card doesn’t charge any fees or interest. Instead, TomoCredit makes money from interchange fees — a surcharge assessed on the merchant when you use your card to make a purchase.
Hence, unlike traditional credit cards, the Tomo Card doesn't allow you to carry a balance from one month to another, making it impossible to rack up debt. You initially start off with a seven-day automatic payment schedule. A payment is automatically deducted from your bank account to cover the balance every week.
Frequent payments keep your credit utilization low (a key factor in your credit scores) and help you establish credit. Payments are reported to all three major credit bureaus: TransUnion, Equifax and Experian. These companies collect the information used to calculate your credit scores.
After about three months with the card, TomoCredit allows you to shift the payment schedule to a more traditional cadence of once per month, according to Kim.
Nerdy tip: Even without the risk of fees or interest, you should still make payments on time to prevent the card from being frozen and your credit from taking a hit. Accounts that are delinquent may still be reported to the credit bureaus and get sent to collections, Kim says.
4. The credit limit is potentially generous, and it earns rewards
Depending on the factors that TomoCredit weighs in its underwriting, it's possible to get a credit limit of up to $10,000. After making the first payment on time, you may also see your credit limit increase, Kim says.
Cardholders will also get a 1% cash-back rewards rate, which is below average for traditional cards but competitive among cards in this class.
You can redeem rewards for statement credit.
5. You may qualify with no Social Security number
Newcomers to the U.S. who want to build credit may also qualify for the Tomo Card. If you don’t have a Social Security number or Individual Taxpayer Identification Number, it’s possible to apply with your passport information, Kim says.
This is a feature that's become a little more common over the past few years. Other cards that don't require a Social Security number upfront in certain situations include the Jasper Mastercard® and the Deserve® EDU Mastercard for Students.
Similarly, those cards charge no annual fee and earn rewards.