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Why banks said no
When Nubank asked why so many banks gave no access to credit, the answer was that people didn't want it. What people lacked was a product that matched their needs.
The $20 start
So for a lot of people the first credit line was $20. Banks looked at that product and thought it was absurd. People appreciated it, because $20 was better than zero, and over time the $20 became 100, and the 100 became 1,000.
Building credit with AI
That is how a credit history gets created, through a product that fits the person. Nubank's plan adds an AI copilot that tells the customer which spending, investing, and saving moves raise their creditworthiness, a coach for improving access to credit and the overall financial picture.
How does a tiny credit line build a credit history?
A credit history is a record of borrowing and repayment, and a small limit lets a lender start that record while risking very little. Each on-time repayment gives the lender data it did not have before, which supports a higher limit later. Credit bureaus such as Experian, Equifax, and TransUnion build their reports from these repayment records. Brazil's central bank launched a national credit registry that gathers lender data, so a record started with one lender can be seen by others.
Why did banks consider small credit lines absurd?
Every account carries fixed costs for underwriting, servicing, and fraud monitoring, and a small balance earns little interest to cover them. Traditional banks with branches and large staffs could not make money on tiny balances. A digital lender with low servicing costs can make the same account worthwhile. Interchange fees, which merchants pay on each card purchase, also add revenue to small accounts.
How did credit cards begin?
The Diners Club charge card appeared in 1950 and let members pay at a set of restaurants in New York. In 1958, Bank of America launched the BankAmericard in Fresno, California, mailing cards to thousands of residents who had not asked for them. That license later became Visa. Mastercard grew from a rival bank alliance that began in 1966.
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