Augie Hopes to Shatter Credit Invisibility and Create Eligible Borrowers With Its No-Deposit Secured Card

Millions of Americans are locked out of the credit system, and the statistics are getting worse. In recent years, there has been an increase in so-called “credit building” products, yet approximately 20 million consumers are still completely credit invisible, and another 18 million to 20 million have thin files.

Augie’s Co-Founder, Paul Harkins, notices a theme: There are just a lot of programs making promises that do not deliver.

“They’re lining pockets, but they’re not building credit,” said Harkins.

Released this spring, Augie goes about things differently. It provides a secured credit card that bypasses typical roadblocks — no credit check, no upfront deposit. Rather, it models how individuals already pay bills using debit cards and bank accounts, transforming those common payments methods into opportunities to build credit.

The concept for Augie began nearly 10 years ago as Harkins’ son returned home from college abroad. Though gainfully employed, he was unable to qualify for fundamental financial services because of an insufficient U.S. credit history. Harkins and his co-founders reviewed traditional credit-building tools and found them lacking.

Drawing on their background in banking and compliance, they built a model that enables users to establish credit incrementally, applying a security deposit transaction by transaction.

Rather than tying up hundreds of dollars of collateral, funds are withdrawn from the customer’s bank account before payment and then applied to pay an intended bill.

It is a secured card that operates for a consumer like a debit card, eliminating the requirement of advance funding.

Credit invisibility disproportionately affects immigrants, younger individuals, and low-income people. Most of the population classified as credit-invisible, or about one-third, consists of immigrants. Another third of this population are those under 25 years old.

The remaining population is mostly low-educational-level workers with low financial support.

Even as the Augie team expected initial users to be youthful, adopters have disproportionately turned out to be in their mid-30s. Augie is often discovered by many of these users at their workplace, where it’s offered as a well-being perk.

That demographic surprise indicates that there is an even larger issue at hand: Many working adults remain locked out of credit.

The implications are rippling throughout the lending business. As decline rates increase, driven not only by debt-to-income ratios, but by nonexistent credit files, Augie has emerged as a tool to be used by lenders. When borrowers come up short, originators send them to Augie to establish the credit history they lack.

Augie is not only a consumer good — it’s a pipeline builder. Harkins reported that the company has already secured partnerships with financial institutions to graduate consumers to traditional credit offerings when they reach qualifying scores. Education is part of the package, helping consumers learn about long-term credit well-being.

The firm earns revenue mainly through conventional interchange fees earned by credit card companies and not by adding charges to users. That’s by design. By keeping its product free of recurring charges and interest charges, Augie makes itself an upfront, low-friction option for those at the financial periphery.

Consumers usually sign up using invitation codes provided by employers, banks, or credible partners. Such gatekeeping helps to establish credibility and counteract doubt.

“If you tell someone with no credit, no deposit required, they think it’s too good to be true,” said Harkins.

Once they sign up, the app looks at the consumer’s bank account and identifies recurring charges — their cellphone bill or streaming service subscription, for example.

The product is live, but currently limited to users with invitation codes from Augie’s partners. More public access is coming later this year. In the meantime, they’re observing user behavior and refining the experience based on real-world use.

There are early signs that users are employing the card just as it was designed. As mainstream solutions fall behind and the population of credit invisibles expands, Augie can provide just the connection the industry requires.

Lenders gain additional qualified borrowers. Consumers can see the beginning of an actual credit history — and access to long-term financial inclusion.