Lenny is a new financial app that will offer credit lines of up to $10,000 to millennials and report their payment activity to credit bureaus to build their credit history. A millennial is considered a person who reached adulthood around the year 2000.
Lenny is designed to modernize credit for millennials. As a demographic millennials lack credit and that impacts major purchases such a cars and homes. According to Lenny 49 percent of millennials don’t have a credit card and 43 percent hold credit scores below 600. The Lenny app seeks to empowers young adults to take control of their finances through credit lines, peer-to-peer payments and credit-score education.
According to the Wall Street Journal the average U.S. college student leaves school $35,000 in debt. These graduates are in desperate need of help to secure loans and find solid financial advice. Many millennials are entering the job market financially handicapped with little or no knowledge of how the credit score system works. Lenny offers a way to fix this situation by offering financial tools and education through its blog.
But there is another factor that come into play. Many millennials are rejecting credit or at least credit cards. According to a survey conducted by Bankrate 63 percent of people between the ages of 18-29 years old have no credit card.
Another interesting fact from an April 2014 Gallup poll revealed that Americans’ reliance on credit cards, in general, has declined steadily since the Great Recession. Additionally, it is tougher to get a credit card thanks to the the Credit Card Accountability, Responsibility and Disclosure Act of 2009, or CARD Act, made it harder for anyone under 21 to get a credit card.
Lenny founder Joe Bayen admits to his own credit problems while he was in college. Bayen used a credit card to purchase a car while in college resulting in a poor credit score. Now that he has recovered from that experience Bayen seeks to prevent other students from making the same mistake.
To use Lenny millennials simply download the app and set up a Lenny account. By signing up they can apply for an initial credit line from as little as $100 up to $10,000 with zero percent interest if they make the payments on time. Rates increase from as low as 4 percent rising to an average of 9.8 percent interest when payments are not made in full. Lenny uses a credit decision algorithm to determine an individual’s credit score. After a credit line has been approved, users can move the money to their personal bank accounts or instantly pay their friends using the peer-to-peer payment function. When re-payments are made on time, users’ credit limits can increase by up to $1000 a quarter.
“Lenny is building a one-stop shop organization that serves the financial needs of a generation,” said CEO and co-founder Joe Bayen. “We help individuals improve their credit scores by informing major credit bureaus when payments are made on time. Your improved credit score can then be used to rent a house without needing a cosigner, help secure great credit cards, and more.”