x1 Card Raises $12 Million - Income-Based Credit Limits

X1 Card is securing $12 million in a new funding round. The firm is developing a credit card that establishes spending limits according to your present and anticipated earnings, rather than relying on traditional credit scores.

Spark Capital is heading the investment, with contributions from Jared Leto, Aaron Levie, Jeremy Stoppelman, Max Levchin, and Ali Rowghani. Furthermore, Ash Gupta, a long-time executive from American Express – formerly their chief risk officer – is joining the company as an advisor.

The company reports having accumulated almost 300,000 individuals on its waiting list. Previous coverage of X1 Card in September generated significant reader interest, making this signup figure understandable.

The X1 Card is a Visa credit card constructed from stainless steel, distinguished by its unique approach to creditworthiness. Upon application, the company focuses on evaluating your current income and future earning potential, instead of your credit score to determine your credit limit.

The startup contends that the conventional credit scoring method is obsolete and doesn’t accurately represent an individual’s ability to manage credit. Consequently, it bypasses this system when establishing limits. While your credit score does influence your variable APR, which ranges from 12.9% to 19.9%, that is its sole impact.

The credit card is also supported by a range of integrated software functionalities. These include the ability to monitor your subscriptions directly within the X1 app, the creation of temporary, auto-expiring virtual cards for free trials requiring payment information, and automatic notifications regarding refunds.

Regarding rewards, cardholders receive 2X points on every transaction. Spending over $15,000 annually qualifies you for an upgraded tier, increasing your rewards to 3X points. A referral program adds a social component, granting 4X points for a month when you refer a friend. Accumulated points can be redeemed through various retail partners.

With this new funding, the company is now financially equipped to fulfill its stated promises and deliver on its planned features. The true test will come as initial cardholders begin using the product, but it’s evident that the current credit scoring system is in need of modernization.