GreenSky Credit finds way to profit from both lenders and borrowers with no risk

GreenSky Credit is one of the most innovative fintech companies to come along since the industry’s inception. Ironically, it has been the embrace by GreenSky Credit of the traditional banking system that has set it apart from its more revolutionary peers. While companies like Lending Club and OnDeck, both of which were once touted as disruptive and having massive potential, have struggled to make a single cent, GreenSky Credit has been tearing up the loan-underwriting business for more than a decade, bringing customers, merchants and banks together in ways that have never before been possible.

GreenSky Credit was founded by serial entrepreneur and former child prodigy David Zalik. As the CEO of an e-consultancy firm in the early 2000s, Zalik got the chance to work with a large number of businesses in the home-remodeling space. He saw that a major problem that these companies faced was customers who discovered that the true cost of the projects they wanted to carry out often turned out to be far more expensive than what they had planned for. When customers saw bids coming in at $5,000 to $10,000 higher than what they expected, sales often fell through and merchants lost business.

Zalik decided that there was room for a company that could instantly match lenders with merchants at the point of sale who were looking for strong ways to overcome the most potent objection of customers buying big-ticket items: price. The GreenSky platform is able to do exactly that. By matching over 17,000 merchants with 14 of the largest lenders in the country, GreenSky can provide instant approval on loans of up to 6 figures. Because the average GreenSky customer is a prime borrower, having an average FICO score of 760, the company can offer great loan terms while also guaranteeing extremely low delinquency and default rates for the lenders.

A typical point-of-sale loan offer for a GreenSky customer is one that involves no payments or interest for the first year. Because most of the lenders are prime borrowers, the vast majority of these loans is paid back in full before the higher rates kick in.