Consumer Credit and Financial Literacy

So, hey, excited to be here at the MX Money Experience. We're not on the lift today, but uh, we've got a lovely little Airstream set up here for the podcast. And I'm here with, uh, Lamine with Stellar Fi. My name is Sheldon Brow. I'm the founder of Pocket Finance. We're a dual interface platform, truly client-centric and trying to become the most trusted platform for financial professionals to be able to interact with their clients ongoing and be able to coordinate with other professionals so clients don't, uh, run around like confused project managers when they're managing their finances.

And if you wanna introduce yourself for us, Lamine.

Thank you, Sheldon. It is cozy in here. And, uh, and thank you for making the introduction. Uh, my name is Lamine. I am a founder and CEO of a company called StellarFi. StellarFi is a bill payment platform designed to help people pay their bills on time and build their credit. It's that simple.

So I, I went to check out StellarFi when they connected us and said, we'd be talking and I want to obviously know what you guys are about. And the first thing I saw was, uh, giving access to good credit. And in my mind, uh, because you know, I'm the fisherman's son that's shaking his, uh, fist at the, at the, sometimes the, the old, you know,monopoly man ways of business and the payday loan company, as I thought, yeah, people absolutely need access to good credit, but it wasn't about good credit facilities at your level right up front, it's about establishing good credit scores, uh, and which of course, in turn gives you access to better credit.

Uh, we are innovating in technology. We want to continue to see institutions innovating in products and, and have you facilitate getting access to those. And you shared some, you know,

as we were chatting outside, some pretty interesting insights that were shocking to me. And I,

I thought I was the guy that had put a lot, most of the effort of a lot of people in Canada of looking at, you know, uh, understanding how the credit bureau, the, the FICO scores and, and how these things work. They're very secretive, um, and was very encouraged to see what you guys are building. Uh, tell us a little bit about kind of, you know, what's, what's different from what is out there to help build credit and what you guys do.

Of course, Of course. Yeah. Thanks for that. Um, so I'll start with an introduction of the concept of what we do and why we do it and why we started. So sort of think of it as like upstream when it comes to, uh, access to credit and how it relates to that literacy and wellness as well.

Absolutely, absolutely. 'cause it, it's all highly interconnected.

Um, so when we looked at the problem and we realized that in the United States, and I'm sure Canada, uh, UK is actually in a very similar boat. Uh, most commonwealth countries, believe it or not, because of the sort of a consumer credit centric economies, uh, the problem is pretty acute. People have that credit. And so when we, we sort of looked at the data, we were absolutely just amazed by how many people in this country have bad credit scores anywhere between 150 and 175 million Americans, uh, on average have, uh, scores below six 80.

That's driven by many different sort of issues. For example, one is that most Americans, one in three Americans are habitually late in paying their bills. And that obviously affects your credit score. Uh, another interesting stat is that there's, uh, $17 trillion in consumer debt in the United States, and close to $500 billion of it is delinquent, meaning that people are behind on that debt, which, you know, aligns with people being late on their bills.

Mm-hmm. Uh, and so approximately 175 million people in this country have delinquencies in their profile. And if you have delinquencies, naturally credit suffers. And so we looked at solutions that existed out there because, uh, that was always, by the way, very sort of like personal for me as a problem.

I've experienced it. I had terrible credit score growing up. I'm, I'm an immigrant. My family had no idea how to navigate, uh, you know, the sort of a financial landscape here. My mother made mistakes. I've made mistakes. I've paid for those mistakes dearly. And so when I, you know, realized that it wasn't just immigrants, so marginalized groups, it's like everyone has the same problem. Uh, you know, we, we wanted to dig deeper and look at trying to identify solutions out there.

And what we discovered is that most products that help people build credit are not necessarily addressing the problem at its core, which is late bill payments. They're sort of like treating the symptoms. Um, and symptoms, for example, most, to be honest, most credit building solutions are loans. They can be masquerading as cards, but really what they are, uh, are secured loans. So if I am a lender and I wanna help you build credit, but I don't trust you because you'll have bad credit. The ones that build the credit the best, you can't even get into it.

That's right. Exactly. So what I do is I say, Hey Sheldon, um, give me a hundred bucks and I'm gonna give you a hundred dollars line of credit. So if you don't pay me, I'll keep your money that's sitting in my bank. Uh, as you can see, that's really inefficient. Also, what I'm doing here is I'm distorting the true nature of risk, because I'm not taking any risk at all, but I'm reporting your payments as if you're paying your payments on time.

And the bureaus hate it. The industry hates it, but, you know, banks have been doing it. Small banks have been doing it for a long time now. Fintechs are doing it. We said, we don't wanna do this. What we want do is address the issue of late bill payments. And so when we started building, we decided to, instead of build a credit card or a loan product, we decided to build a, a bill pay product that creates discipline around repayment, but also allows us to then report that repayment to, um, to the bureaus.

And what we do is we pay your bills using our money, and then you pay us back. So in many ways it is like a credit card, it's a revolving line of credit. And so you can pay any bills any as long as they're recurring bills in our system. You can pay your Netflix bill, any subscriptions, you can pay, you know, big ticket items like rent. Uh, we've seen folks pay, uh, child support, for example. Something that certainly does not build you credit. Um, and, uh, and if you're a good child support payer, I mean, why not reward you for that?

Right? And so if you pay it using our system, uh, and then pay us back on time, guess what? You're building credit, we're reporting it and you never sort of incurring long-term debt. We help you repay us back faster.

Obviously we're incentivized to get our money back. So anyway, I know this is a lot, but let me, let me pause here.

Well, let me just quickly bring it back for just one moment. Uh, as we close out, you know, it starts with financial literacy. I've always had this dream that, you know, 'cause I I, I ask also, as soon as I get a credit card, you get a free box of cookies for a credit card, you mess up your credit 'cause you don't know what you're doing with it.

And that puts you in a position where now you can't go and get those more sophisticated products. The line of credit is the cheapest. It's the best product you can get. Yeah. There's no fees monthly. It's a minimum interest when you need it.

So there's a big attachment to those early stage and, and, and, you know, you even are able to report subscriptions and all these things that a lot of people wouldn't have understood that that's gonna bridge the gap to more sophisticated pro products. Mm-hmm. Better access.

And this is gonna really have that financial wellness that we want everyone to have. Because imagine, you know, that many people that you've talked about with that low credit score, and they don't, sometimes they understand the implications, sometimes they don't. But when you're spending time with your kids, with your grandparents, you, you don't want to have 75% enjoyment of that time. That's right.

You don't wanna be at 60. You don't even wanna, you wanna get as maximum high percentage or close to the a hundred percent enjoin at the amount of time rather than this unwellness of, you know, which is prompted by literacy, lack of empowerment.

If we don't have that innovation in both the tech technology and the products that the institutions and then it's literally affecting every part of your life. I mean, there's huge statistics on, it's, it's mental health, it's emotional, uh, it's, it's physical health, you know, heart attacks and everything else.

But just if we just take it down to the core of I don't get to have the full-time with my daughter and my grandmother that I want to be able to have. It's, uh, it's a, it's a, it's, it's very impactful. It's what you're doing, but it's, you know, the implications are, you know, broader than we think about it, the surface level of just getting access to better products doubt, which is super important. Of course, we without doubt it, because, because money affects, you know, all aspects of life and, and certainly like your interactions with family members, you know, I think money is the No. 1 reason for divorce.

Uh, It is.

And, and it's, it affects you in such an interesting way.

And it's the No. 1 stress over every other stress that exists statistically.

That is very true. Especially in a capitalist society where, you know, yeah, money is the sort of the thing that makes, it's, it's the lifeblood, so to speak, right. Of the economy. Yeah. It's fascinating. Um, you know what, when we talk to our customers and we talk to friends of our customers and we talk to anyone who cares about this, we sort of realize that there's, as you said, there's lack of education, lack of knowledge, and as a result, people are trying to solve the problem. But, you know they don't have the tools to solve it, and they're doing crazy stuff. Uh, they still, like, they want good credit. They wanna be better at paying their bills.

I just heard a firsthand story from someone who said that, you know, um, I, we've moved around a lot and my dad had this couch that, uh, that he just carried around it. it's an old, you know, beat up couch. And I never understood why he would bring it, you know, to the next house when we moved. And it's like my family's well off now. Uh, but he keeps, he keeps, you know, that couch around. And apparently, uh, he bought that couch specifically to build credit because he had no idea how to build credit. So he got out, he went to the bank, he took a loan out to buy a couch to then pay off the loan just to have a credit profile so he can operate. And a society, you know, as a, as a citizen, so to speak, right?

Credit score is almost like a citizen score indicates that you are, you know, you're good for the social contract that that's in place. And to me, it was a fascinating story is that someone had to go and like do this crazy, you know, mental gymnastics, go to the bank, get some money to go buy this couch for a few hundred bucks and, and now this couch, you know, represents, and maybe he didn't even need it that badly did,

Established the credit. Precisely, precisely. Well here's the hoping that we get a chance to work together to make a big positive impact on the wellness and the literacy.

That's right. And, uh, the needs that, uh, both you don't, you know, you down in the U.S., and me and Canada both have for people that we serve.

Let's do it.