Build Your Credit Score Faster Through a Fintech Platform That Reports Paid Bills to Credit Bureaus

In a Nutshell: We’d all like to improve our credit scores, but it’s easier said than done. StellarFi is a company that helps people build credit and manage their bills. The company reports your on-time payment of bills to credit bureaus. StellarFI is a public benefit corporation that’s committed to making a positive impact on society. 

I’m always impressed by people who find a way to repurpose something and get more value from it. For example, gardeners have a number of different fertilizers they can buy to provide more nutrients to their plants and make their garden beds healthier. But, if they don’t have much money left in their garden budgets, they may want to turn to DIY fertilization methods that are lighter on the wallet.

Some gardeners spread grass clippings over their garden beds to nourish them and prevent weeds from growing. Most of us have to mow our lawns anyway, so it makes sense to get another use out of those grass clippings. As a bonus, grass clippings placed into your garden are much less likely to wind up all over your house when your kids come in from playing in the yard.

StellarFi is a company that helps people get a great deal of additional value from something they’re already doing — paying bills. We spoke with Lamine Zarrad, the company’s Founder and CEO, to learn more about how StellarFi guides its customers to build credit in a practical and easy-to-follow approach.

Zarrad is an experienced entrepreneur. StellarFi is the third company he’s started after forming two neobanks. Neobanks don’t have physical branches but operate exclusively online and offer convenient banking services to their customers.

In working with fellow entrepreneurs, Zarrad noticed that many of them had bad credit scores that hindered their ability to access lending opportunities at times. He told us he had an “aha moment” when he realized that it wasn’t only entrepreneurs who struggled with their credit scores — it was everyone.

“About two-thirds of the adult population have credit scores below what would let them qualify for capital, and that causes them to struggle,” Zarrad told us. “I looked around to see how we could fix this issue, and I quickly realized it’s a pretty saturated space. There’s all sorts of companies that can help you build or repair your credit, but none of the ones I saw were effective enough.”

Dissatisfied with the credit-improvement products and services he saw on the market, Zarrad set out to create a better solution. He told us that he wanted to provide a service that made sense to consumers and didn’t require them to put money aside specifically for building their credit. 

In other words, he wanted to find a way people could improve their credit scores by harnessing the power of something they were already doing.

Companies like VantageScore that calculate credit scores take into account various factors from your credit history. Your payment history, including any missed or late payments, is a big component of your credit score. If you make your payments on time consistently, you put yourself in position to strengthen your credit score. 

“I want people to be able to benefit from the existing momentum in their lives by using the bills that they already pay to build their credit,” Zarrad told us. “And that was the idea behind the birth of StellarFi. If we can help people pay their bills on time, then credit improvements will come, and they’ll actually be better borrowers and managers of their financial obligations.”

StellarFi issues customers a virtual payment card that they can use to pay their bills. Users link their card to monthly payment schedules for electric companies, subscriptions, and other regular bills, and StellarFi automatically pays  customer bills on their due dates. StellarFi then debits the amount of the paid bills from its customers’ checking accounts. 

Part of the appeal of StellarFi is that it allows you to authorize and manage payments on its platform. This enables you to attend to all of your bills from one interface. So, using the company’s platform can save you time and help you to stay organized.

StellarFi provides additional value by reporting customer payments to credit bureaus, which helps you to improve the payment history component of your credit score. Zarrad told us the company’s multi-faceted solution can even help people who already have excellent credit scores. He said he uses the StellarFi solution himself, even though he has a decent credit score.

“As we grew as a company, we discovered something that we did not expect to happen as quickly as it did,” Zarrad told us. “A good portion of our customers join with pretty good credit scores of around 700 or above. And they continue to use our product for the purpose of keeping all of their bills in one place, so we think of ourselves as much more than a company that helps you build your credit.”

Though credit-building is a big part of what StellarFi does, Zarrad told us that nothing exists in the consumer space that’s similar to the company’s expense-management solution.

According to a recent report from the U.S. Bureau of Labor Statistics, a consumer’s average annual expenditures amount to more than $72,000, which is more than $6,000 in expenses per person per month. If you ask me, that means the average person is responsible for a lot of bills every month.

StellarFi customers can pay bills through the company’s interface to more than 10,000 businesses, including large enterprises and mom-and-pop stores. 

But don’t worry if you have a company you need to pay that you can’t locate in StellarFi’s catalog. Zarrad told us the company allows users to submit information about billers they can’t find in the StellarFi system. StellarFi will review submitted billers, and, if they determine the company is legitimate, they’ll approve the biller and add it to their system.

Though StellarFi designed its product to meet the needs of customers of every age, Zarrad told us he thought its tools would appeal most to members of Generation Z, or those born between 1997 and 2012, because it’s high-tech and low-cost. But the service’s appeal actually crosses generational lines.

“We have folks as young as 18 and as old as 57 on our platform, so the overall age range we serve is actually pretty wide,” Zarrad told us. “But what we’ve discovered is that many of our customers are what we call aging millennials, meaning they’re generally in the middle of their 30s. The primary goal for a lot of people that age is improving their credit scores, and that’s why they’re using StellarFi.”

StellarFi serves customers across the U.S., and most of them reside in or around large metropolitan areas. 

You can set goals within StellarFi’s app to help you remember why you’re being so diligent in managing and paying your bills. Zarrad told us many customers are trying to improve their credit so they’ll be able to get approved for a loan and access better loan terms. After all, lenders offer more favorable interest rates on credit products to people with excellent credit scores.

“Of course people use StellarFi to grow their credit scores so they can buy a house or a boat using a loan with lower interest rates,” Zarrad told us. “But what has been delightfully surprising to us is that people have also indicated in their goals that they use our tools to help them manage their finances. They want to be more responsible.”

People aren’t likely to do something they don’t want to do if it won’t help them in some way. For instance, I don’t think I’d be eating vegetables too often if I didn’t know about their health benefits. 

Maybe you don’t believe that responsible money management can improve your credit score. In that case, Zarrad shared some statistics with us that might change your mind. He told us that customers who come to StellarFi with a credit score between 500 and 600 will improve their scores, on average, by 65 points within their first seven months of using the company’s solution.

StellarFi is a public benefit corporation, which means it’s a for-profit business with a commitment to deliver a positive social impact.

“Being designated as a public benefit corporation means you’re driven by a mission that isn’t just concerned with profits,” Zarrad told us. “In our case, we have a societal impact mission that motivates us to give a portion of our profits back to our customers in a number of different ways, like rewards. It’s something that’s written into our charter and our board holds us accountable to it.”

During our interview, we found out that StellarFi is preparing to launch a new rewards program. Zarrad told us the program will allow customers to earn points on every bill they pay on the company’s platform. Customers can then use their points to lower the amount of future payments they make through StellarFi.

The company also holds random drawings for cash prizes that users can apply toward future bills.

“We generate revenues from card interchange, and then we give a portion of that interchange back to our customers,” Zarrad told us. “Everything we do is based on engagement. We also plan to educate our customers so they learn as they go through the credit-building process.”