Is Cred.Ai a good solution to help build your credit?
Cred.ai is a credit-building service that describes itself as a “high-tech and premium card spending experience.” Its main product is the Unicorn Card, which it says is a “life-changing debit card replacement” that will help you build credit automatically.
If you want to build or establish credit but are wary of traditional credit cards, the sales pitch is certainly appealing. Before signing up for Cred.ai, it’s important to understand how the service works to decide if it’s right for you.
What is Cred.ai?
Cred.ai is a financial technology company that offers an innovative credit-building credit card called the Unicorn Card. The card is marketed toward younger people who prefer mobile banking and may have a limited credit history.
The Unicorn Card is designed to work alongside Cred.ai’s deposit account. When used together, the company says customers will automatically build credit without overspending or paying fees or interest. Both products are issued by WSFS Bank, a federal savings bank headquartered in Delaware.
How does Cred.ai work?
Cred.ai’s Unicorn Card works differently than a traditional credit builder credit card. The Unicorn Card is a starter credit card with guardrails to keep you on track and out of debt.
You can use the Unicorn Card on its own, but to access its full credit-building features, you’ll need both Cred.ai’s deposit account and its credit card. The deposit account is linked to one or more of your existing bank accounts.
Cred.ai calculates how much you can safely afford to spend on your Unicorn Card, based on the balances of your deposit and linked bank accounts. As you make purchases, it sets aside enough deposit account funds to cover the payments. On or before the due date, it initiates an automatic payment.
Key features of Cred.ai
Cred.ai advertises several key features of its Unicorn Card and associated deposit account, each with a quirky name that matches the company’s youthful, non-traditional branding:
- Check Please: The company says this feature helps you avoid the embarrassment of having your card declined. If you’ve reached your credit limit, but Cred.ai determines you can safely spend more and still repay the balance, it will allow the transaction.
- Flux Capacitor: With the Cred.ai deposit account, the company says you can get your paycheck up to two days early. This feature also gives you an advanced warning of upcoming withdrawals from the account, such as a pending utility bill.
- Friend & Foe List: Cred.ai allows users to designate “approved merchants” and “disapproved merchants.” It aims to ensure transactions from approved merchants go through while transactions from disapproved merchants are blocked.
- High Security Mode: This fraud-prevention measure allows you to create short self-expiring authorization windows, reducing the risk of someone else using your card.
- Stealth Card: With Stealth Card, you can generate temporary credit card numbers to use online or over the phone in place of your actual Unicorn Card number. Other credit card providers call this security feature a virtual credit card.
What are the pros and cons of Cred.ai?
As with any credit-building option, Cred.ai has both pros and cons to consider before you apply.
Pros
- You could improve your credit. The company says its users enjoy a median credit score increase of 90 points, based on an analysis of Experian Vantage credit score changes. Remember that no company can guarantee a specific change in your score since many factors go into credit scoring.
- You can avoid fees. Unlike many traditional secured credit cards, the Unicorn Card has no annual fee. Cred.ai does not charge cash advance or foreign transaction fees. However, fees do apply in some cases, such as if you make a late payment or need a replacement card.
- You get a stylish metal card. The Unicorn Card is made of metal and features a silver unicorn design on a black background. Metal cards are heavier and sturdier than standard plastic cards. Most metal credit cards are reserved for people with excellent credit.
- Your card is widely accepted. Cred.ai’s Unicorn Card is issued by WSFS Bank and licensed by Visa, meaning you can use the card anywhere Visa is accepted. Visa credit cards can be used at more than 10 million merchants in the U.S.
Cons
- You might not be approved. With traditional secured credit cards, approval is near-guaranteed, even for people with bad credit. To be eligible for an account with Cred.ai, applicants must meet certain minimum income and credit quality requirements.
- You need to use the mobile app. Cred.ai operates exclusively through its mobile applications, which customers can download through Google Play or the App Store. There are no physical branches to visit if you want face-to-face help with your account. However, the company does advertise 24/7 customer support via phone.
- You don’t earn rewards. You won’t earn points, miles or cash back when you make purchases. This downside isn’t unique to Cred.ai, as the best rewards cards are typically reserved for people with good credit.
- You can’t upgrade the card. Traditional secured credit cards often give customers the option to upgrade to an unsecured card as they progress on their credit repair journey. Currently, Cred.ai only offers one version of its Unicorn Card.
Is Cred.ai right for you?
Cred.ai’s Unicorn Card and deposit account are a unique credit-building option that may appeal to some people who are working to repair their credit. You might consider using Cred.ai if:
- You’re new to credit. The Unicorn Card’s guardrails, including its automation and guarantee that you’ll never pay fees or interest, can make it a good starter card for people wary of using credit. However, since it doesn’t teach good credit habits, there may be a learning curve when you get a traditional credit card later.
- You want to build credit without taking on debt. When you purchase something with your Unicorn Card, Cred.ai sets aside enough money in your deposit account to automatically pay the bill. This ensures you don’t spend more than you have.
- You have trouble with overspending. Cred.ai calculates the amount of money you can safely spend at any given time, helping to protect you from overspending. The option to block purchases from specific merchants could also help you stick to your budget if there’s a certain store where you tend to overspend.
- You prefer mobile-only banking. Since Cred.ai is 100 percent mobile, it may be a good option for people who are comfortable managing their finances through apps. On the other hand, if you prefer face-to-face customer service, look into secured credit cards offered by brick-and-mortar banks.
- You want early access to your paychecks. Cred.ai’s deposit account lets customers access their paychecks as much as two days early, which can be appealing if you often need access to money before payday and want to avoid payday loans.
The bottom line
Cred.ai’s Unicorn Card and associated deposit account are legitimate products issued by WSFS Bank. While not a traditional credit card, the Unicorn Card may be an appealing option for people who want to build credit without worrying about overspending or paying fees or interest. However, the card doesn’t offer rewards or upgrade opportunities, so once your credit improves, you’ll likely want to move on to one of the best credit cards.
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