Pandemic-induced hardships are boosting demand for credit monitoring, counseling and repair

When Nirit Rubenstein first met Tedis Baboumian, they immediately struck up a friendship over their shared experiences as immigrants and military veterans. Both had families who had financially struggled upon their arrival in the U.S. This struggle was amplified further by how hard it was to qualify for loans. 

“We witnessed firsthand how lack of access to credit impacted our lives in serious ways. Our parents couldn’t even rent an apartment,” said Rubenstein.

In 2018, Rubenstein and Baboumian launched Dovly, a credit repair service that offers credit monitoring and ways to improve a credit score. 

Consumer credit scores can dictate quality of life. Poor credit equals lost economic opportunities when it comes to mortgages, loans, retirement, rent, insurance and jobs. Higher credit scores, on the other hand, can open up avenues for financial security and wellbeing. 

Dovly helps consumers rectify their credit scores. Its services are powered by an algorithm that optimizes credit score corrections. The Phoenix-based company also provides electronic communication with credit bureaus and 24/7 automated assistance on credit enhancement. 

Although still in its early stages, the startup has grown since its initial launch in 2018. The platform is distributed through channel partners that sell Dovly’s services and can be utilized by companies using credit based decisions in their customer interactions. In 2019, Dovly partnered with Chime Bank and within the span of a year, expanded to include more than 10 channel partners. In June, Dovly raised $2.25 million in seed funding spearheaded by venture capital firm NFX.

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“Dovly is on a mission to empower everyone to get ahead financially. We seek to level the playing field by making our services affordable and accessible to anyone who needs it,” said Rubenstein. “92 percent of our users improve their score by an average of 54 points in less than 6 months. Some users have boosted scores over 100 points, opening doors to financial products that were never available to them before.”

Companies that offer credit counselling and credit monitoring services like Credit Karma and Credit Sesame have grown considerably in recent months and have expanded into providing banking offerings. Intuit which owns Quickbooks and Mint acquired Credit Karma for a massive $8.1 billion deal earlier this year.

Since the eruption of the COVID-19 pandemic, millions of Americans have been laid off and continue to face economic insecurity. FICO reported an increase in credit scores to an average score of 711 in July. The upward trend, however, does not accurately represent the current economic climate due to the temporary balm provided by government stimulus packages, unemployment benefits and delayed mortgage payments. FICO scores have a tendency to lag behind realities on the ground but inevitably do catch up. 

As the pandemic continues, a good credit score will become increasingly pertinent to the financial health of consumers bearing the brunt of financial misfortune.

“With identity fraud on the rise, and the economic crisis facing the United States, credit report mistakes will become even more prevalent in the coming year. Credit issues will continue to impact lower-income households, further increasing the financial divide,” said Rubenstein. 

Credit expert John Ulzheimer doesn’t necessarily agree. “The demand for credit repair services is remaining relatively stable and not necessarily spiking because of the fallout of COVID-19,” he said.

“The CARES Act provides some iron-clad credit reporting protections during the National Emergency Declaration, so even if someone has been financially impacted by COVID-19, their credit reports are not being polluted with derogatory entries.”