Arro announces $10m seed funding to democratise credit

By Edlyn Cardoza

Los Angeles-based FinTech company Arro announced the closing of $10m in seed funding led by Crosslink Capital with participation from Bling Capital, BAM Ventures, Global Founders Capital and WTI, among others. These investors have previously backed companies such as Chime, Facebook, Honey, and NerdWallet.

Arro is a credit platform that empowers U.S. consumers to grow their credit through financial literacy training and behavioural science incentives. Arro aims to approve nearly any U.S. consumer for its low-interest credit card, regardless of credit history, based on income and other alternative data.

“For far too long many American families have been shut out of the financial system due to various factors that have negatively impacted their creditworthiness,” says Chris Campbell, Arro Advisor and Former Assistant Secretary of the US Department of Treasury. “This lack of access to basic credit has a dramatic negative impact on their daily lives. This reality needs to change which is why I’m proud to be part of the solution at Arro that will not only unlock a system that they have been on the outside of but will also teach them the tools to spend, save, and pay wisely.”

By using a proprietary underwriting model instead of relying on credit scores, Arro is disrupting the traditional FICO system and providing fair access to consumers who otherwise wouldn’t qualify. Arro’s customer-first approach and partnership with Equifax has resulted in a special designation to not require a hard credit inquiry, meaning that applying for an Arro Card has no impact on someone’s credit score.

“The majority of consumers are skeptical about lenders, not just those with poor or no credit,” says Luke Pelullo, Co-founder and COO at Arro. “Over 150 million people are locked out of mainstream credit, and the truth is that lenders are incentivized to promote overborrowing. We are truly turning the predatory lending model on its head and putting consumers and their financial health first.”

Through a gamified app experience, users can increase their credit lines and decrease interest rates by completing personal finance activities on how to use credit responsibly, reach savings goals, budget effectively, and more. While most lenders only look at someone’s past, Arro is focused on the present, setting consumers up to be successful and empowering them to manage a growing credit line.

In 2022, 72% of Americans had some or very little confidence in financial institutions, according to a Gallup survey.

“Many financial institutions make money from people overspending or going into debt,” says Ryan Duitch, Co-founder and CEO at Arro. “Arro is the only credit platform that addresses a major root of financial hardship: lack of financial literacy. While many financial apps cover up short-term symptoms of debt and profit from high interest and hidden fees, we are proud that Arro does something transformative: we focus on building knowledge and habits to heal people’s relationships with money for life.”

Instead of solely being a spending card, Arro plays an active role in improving financial wellness for its members through education, goal setting, credit building, and other positive financial habits.

“Arro is completely different from any other financial app on the market,” says David Silverman, Partner at Crosslink Capital. “Most importantly, Arro provides opportunity and helps Americans become more financially healthy.”