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X1 Card raises $12 million for its credit card with limits based on your income

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    X1 Card raises $12 million for its credit card with limits based on your income

    X1 Card is raising a $12 million funding round. The company is building a credit card that sets limits based on your current and future income, not your credit score.

    Spark Capital is leading the round with Jared Leto, Aaron Levie, Jeremy Stoppelman, Max Levchin and Ali Rowghani also participating. American Express veteran Ash Gupta is also joining the company as an advisor — he was the Chief Risk Officer of American Express.

    The company says that it has attracted nearly 300,000 signups on its waitlist. I covered X1 Card back in September and it attracted a lot of readers. So that number doesn’t surprise me.

    The X1 Card is a stainless steel Visa credit card with a different origin story. When you apply for a card, instead of determining your limits based on your credit score, the company wants to see your current and future income.

    The startup believes the credit score system is outdated and doesn’t reflect your creditworthiness. That’s why it doesn’t use it to calculate limits. Your credit score still affects your variable APR (from 12.9% to 19.9%), but that’s it.

    There are also a lot of software features that work with the credit card. For instance, you can track your subscriptions from the X1 app, you can also generate an auto-expiring virtual card for free trials that require a credit card. You also get notifications for refunds.

    As for rewards, you get 2X points on all purchases. If you’re a heavy user and you spend more than $15,000 on your card per year, you’re upgraded to a new tier and earn 3X points. There’s also a viral element as you get a boosted reward level when you refer a friend — you get 4X points for a month. You can then spend your points with retail partners.

    The company has promised a lot of features and now has enough cash in its bank account to deliver. Let’s see if the company can live up to the hype once the first customers get their cards. But it’s clear that the credit score system is outdated.