When Chris DiMarco first launched his company, Perpay, in 2016, he didn’t realize how many of his customers had shitty credit scores.
The firm offers consumers, many who had subprime credit scores or no credit at all, the ability to buy common household and tech products from a marketplace and pay over time, directly from their paychecks.
About 30 percent of all U.S. consumers have fair or poor credit. Here in Philadelphia, about 35 percent of residents have subprime credit scores. The reasons why someone might have bad credit are myriad, but in Philadelphia, where around a quarter of residents are unbanked or underbanked, they might not be able to access common means of building credit like getting a loan to buy a car or getting their first credit cards. Bad credit can make it difficult (or impossible) to get a loan to pay for a car or a mortgage. If you can get a loan, you’ll likely pay higher interest rates, so you’ll actually end up spending more money over time compared to someone with a better score.
DiMarco started talking with Perpay’s customers and they asked him: Can you report our payment behavior on your platform to the credit bureaus? Many found that Perpay helped them reliably pay off purchases — and they thought having that payment behavior on record could improve their credit scores. DiMarco decided to give it a shot. The idea: Build credit through small purchases, in order to strengthen credit for larger, more life-sustaining investments.
The impact of that decision has been explosive. People who use Perpay’s credit builder subscription increase their credit score by 30 points on average in the first year. Perpay is the only credit building B Corp (a B Corp is a company that has been recognized by the nonprofit B Lab for its social impact) in the U.S.
Along the way, DiMarco has helped not only Perpay customers, but also its employees with employee benefits like student loan repayment matching, free healthcare and a whole host of perks.
A lifelong entrepreneur
Perpay isn’t DiMarco’s first business venture. A serial entrepreneur, the Abington native got his professional start as an equity trader on Wall Street before moving back to Philadelphia to focus on starting his own businesses. He launched lamps.com in 2010. In 2016, he got the idea for Perpay.
He knew from his experiences running a lighting marketplace — and before that working to sell fragrances — that people’s payment behavior changed when companies offered the ability to pay over time, especially by using payroll direct deposit.
“I feel like it’s best to be quiet, humble and focus on our customers. That’s what we’re good at.” — Chris DiMarco
“They were having to do that money dance every time a bill is due. … If they slipped up and were late on something, then their credit score got dinged,” DiMarco says. “We figured out how to change that behavior and get them back on the right track.”
He built out a system to make that happen. First, he tried to work with companies who might be interested in it, but soon he saw it had more potential as a direct-to-consumer product. He built lamps.com and Perpay simultaneously for a few years, and eventually sold lamps.com to focus on Perpay full time.
As he got to know Perpay’s customers, he realized they could benefit from using his product to build their credit. So, he negotiated with the credit bureaus to use Perpay as a way to evaluate people’s credit scores. He started tracking the impact they had and, last year, applied for and earned B Corp certification.
“We were able to basically become a credit building product, and that credit building product has amazing output,” DiMarco says. “Every additional customer we have, we have more impact.”
Perpay’s products
Perpay has three products: the marketplace, the credit building subscription, and the credit card.
With the marketplace, folks can browse items, say, a new iPhone or a vacuum cleaner, and then pay for them over time, using direct paycheck deposit, rather than a bank account. DiMarco compared it to the many, many Buy Now, Pay Later services — like Affirm or Klarna — that came online after Perpay.
When people enroll in the credit building program, they receive up to a $1,000 spending limit to use in the marketplace. As they make and pay off purchases, Perpay reports their behavior to Experian, Equifax, and TransUnion, the three major credit bureaus, allowing people to build their credit over time.
Forty-five percent of members report that they’ve moved into a higher credit band, moving from subprime to near-prime or near-prime to prime. It costs $5 per month, less than a Netflix subscription. Customers mostly find the company online, through organic referrals or through partnerships with Credit Building services, like Credit Karma.
The final product, the credit card, is an unsecured credit card for people with low or no credit. As with Perpay’s other products, payments are deducted directly from each paycheck (rather than the monthly payment model most credit card companies use).
“We’re putting the tools in the customer’s hands so that their behavior is not automatically putting them in a position where they’re just paying the minimum payment and paying that max fee or that overage fee,” DiMarco says.
First Round Capital founding partner Josh Kopelman is impressed not just by Perpay’s business model, but also its potential to change its customer’s lives. He’s known DiMarco since his lamps.com days and was eager to invest in Perpay.
“They sit down and say, how could we be most helpful to this underserved and often exploited customer population?” Kopelman says. “It offers its customer not just affordable, fairly priced capital, but a path from subprime to prime.”
Leading with B corp culture
Overlooking the Schuylkill River, Perpay’s 15,000 square foot office has floor-to-ceiling windows. Two, giant fiddlehead fig trees grow near the windows, basking in the sunlight.
Employees can look out the window from their conference rooms and see the historic Art Deco post office-turned-IRS building, 30th Street Station and the Philadelphia Museum of Art. Inside, there’s a professional grade espresso machine, a kitchen with a fridge stocked with groceries, and a room DiMarco calls the living room, with massive sectionals, where employees can duck in for brief chats or to complete work in a more chill environment.
It’s reminiscent of a Silicon Valley office circa 2010. DiMarco visited Facebook’s, Google’s and Apple’s offices in 2015 when he was thinking about what he wanted for Perpay.
Since then, most tech companies have … scaled back these perks. Not so at Perpay, where employees enjoy unlimited PTO, in-office meals provided by Huda and Huda Burger’s Yehuda Sichel, a company dog, and Perpay branded Air Force Ones. Once a week they get catering from restaurants around the city. Every year, they host “Perpay Day,” a day-long company event where they bring in speakers, participate in exercises aligned with their core values and have a bit of fun. One year, they brought in Coldplay for a company concert.
People who use Perpay’s credit builder subscription increase their credit score by 30 points on average in the first year.
“Whether it’s swag, benefits, office environment, catering, we try to exceed expectations,” says Alex Miller, chief people officer at Perpay. “We want you to be surprised and delighted by everything that we’re offering for you.”
Beyond the splashy, attention-grabbing perks, the company matches student loan repayment up to $2,000 per year, and covers all medical, dental and vision expenses for employees and their families. (All this at a time when U.S. firms are slashing, not expanding, employee benefits). They’ve also eschewed another trend: remote work. All Perpay employees are in office, five days per week, with the exception of some remote weeks around the holidays.
For DiMarco, treating his employees right is good business. As at many tech companies, many of Perpay’s 95 full-time employees are on the younger side. One of the company’s core values is “draw your own map;” meant to evoke the idea that, at Perpay, you can grow and chart your own path for your career. DiMarco loves seeing interns become fulltime employees.
That’s what happened for Skylar Shafritz, business operations senior specialist. She came to the company soon after graduating from Gettysburg College and started off in a rotational program, where she got to work with a number of different teams. She did stints with the people team and the merchandising team before finding her love for working in operations. For the past year or so, she’s been managing the same rotational program she started out in.
“There is so much opportunity for growth and access to leadership,” Shafritz says. “Within the last two and a half years, I have done what most people would do within five to 10 years at a larger company. You get a lot of exposure to different things, and people are really willing to help you learn and explore things that you’re interested in.”
Perpay’s future
DiMarco declined to share revenue figures, but said the business is profitable. This year, they expect to reach 1 million customers, a number he finds incredibly impactful because of the stories he’s heard from customers.
“People will find Perpay and then they’re like, oh my god, I was able to do Christmas,” DiMarco says. “The reviews we get aren’t just like I love Perpay; they’re like here’s the story of how this company helped me in my time of need.”
For a long time, one of DiMarco’s goals was to help 1 million people with Perpay’s products. With around 750,000 customers to date, they’re getting close. Of those customers, 26,000 over the course of the company’s life have been Pennsylvanians. He’s starting to think about future goals: “Can we help 10 million people? Can we have a million people graduate from subprime to near prime, or near prime to prime?” he says. “That would be really, really impactful.”
He plans to keep his head down and keep working toward that future. In the near term, they hope to help clients continue to improve their credit — and their financial stability — by introducing a savings account.
“We’ve kept doing all the right things for our customers,” DiMarco says. “I feel like it’s best to be quiet, humble and focus on our customers. That’s what we’re good at.”
MORE BUSINESS FOR GOOD
