Credit Hub is a platform that allows you to open various types of credit accounts for individuals or businesses via an API call.
Our mission is to ensure that everyone has access to high quality financial services. So it doesn't matter if your customers are underbanked, recently immigrated, small/medium/large business owners. With Credit Hub, you can onboard customers from all walks of life.
The different accounts we offer have different characteristics, regulatory restrictions, among other distinctions. This variety allows us to offer the best solution for each use case. Please refer to the tables below for an idea of the distinctions between our accounts.
Credit Hub can be used for pretty much any application that requires an embedded credit account. But we have seen our customers building the following use cases most frequently with this offering:
Please note, KYC requirements will differ between individuals and business users, and might further vary depending on the use case and the nature of the user. Here are minimum KYC requirements by account type and user type:
Please note that the above requirements assume that ID Score (which includes real-time SSN verification) is being used for Individuals and Beneficial Owners. If not, US Government Photo ID (
GOVT_ID_BACK) will also be required for all users and beneficial owners.
Synapse's lending entity Synapse Credit LLC will be the lender for the loans. This means it will be underwriting all the lines and serving the loans to the end users or businesses.
To reduce the risk of losses for our lending entity, either the end user will be required to put 1:1 collateral in a reserve account (in case of secured loan products) or you (the platform) will be required to do so while acting as a guarantor of the loans. So in instances where loans default, the reserves will be tapped for covering the losses.
You may also choose to enable credit reporting with us. Currently, if enabled, all credit accounts of your customers will be reported by the 10th of each month for the previous calendar month. Since Synapse's lending entity Synapse Credit LLC is the lender of record, the credit report may show only Synapse Credit LLC or both Synapse Credit LLC and your name on the credit file, depending on the configuration of your program with Synapse.
As a part of any good responsible credit model, a robust credit decisioning policy is a core part of the program. When building credit policies, please consider the following decisioning constructs:
You can filter which of your users has the option to apply for a loan based on various decisioning criteria, we refer to these as prerequisites. Common examples are that the user has been in the platform ecosystem for over six months or that they are part of the platform's premium service.
Although you can propose prerequisites, they will all have to be communicated in detail and be approved by us as the lender of record. Furthermore, if you wish to make a change to your prerequisites, the change will have to be first explained in detail and approved by Synapse for the same reasons.
Please note, filtering the user before solicitation is considered a prerequisite. If you are deciding to decline a loan after the loan application flow has begun, that requires booking an adverse action. Please see Custom Loan Rejections for more details.
At a basic level a loan can be rejected based on the following criteria:
- The user does not have
SEND-AND-RECEIVEpermissions (which occurs when not all relevant KYC has been submitted or verified) or if the user is a match in one of our sanctions lists. Go to Users page to learn more.
- Lending is not currently available for the user's CIP tag or user type.
- The requested amount is above the defined maximum per user loan size of your platform.
- The loan will put you over the limits of the amount (in dollar value) of loans you are allowed to issue.
We handle basic decisioning on our end.
Outside of Prerequisites and Basic Decisioning, some use cases will also require the option to reject a loan after the application process has started. For example, you may receive the user's income level and decide that it is too low. Because this information might be captured after the loan application process started, it cannot reasonably be considered a prerequisite.
As a part of the Fair Lending Act, we are responsible for ensuring that all applicants are being impacted (not just treated) equally and not being discriminated against. As a part of that commitment, we will also be doing regular audits in our system to check for any direct or indirect discriminatory decisioning.
You can supply the APR on a loan at the time of creating a credit account for the end user. At loan creation, you will have the option to set the APR from 0% up to your maximum APR. The maximum rate that can be charged on a loan varies by state.
Since you are not the lender of record, you cannot directly benefit from the interest charged on the loan. For that reason, interest payments go from the user's credit account to Synapse Credit LLC's account.
In some cases, user accounts are eligible to receive payments for deposits kept with us. Here is how those logistics work:
Interest is accrued daily on active credit nodes and impacts the balance.
The interest transaction will be coming from the loan node and go to a Synapse Credit LLC node, with
Interest will be calculated and defined at the moment of the user’s loan approval and will accrue and compound daily against the outstanding balance based on the APR set for the loan node.
Like standard credit cards, revolving lines do not charge interest if the total statement balance is paid on or before the statement payment due date (e.g. before the end of the month following the statement cycle). The statement cycle starts on the first day of the month and ends on the last day of the month.
The statement balance is the balance at the end of the statement cycle (i.e. the balance on the last day of the month). Interest will start to accrue for the statement balance at the beginning of the next statement cycle (i.e. the next day, which will be the first day of the month). Interest will not be charged if the statement balance is paid on the statement payment due date, but the user will owe any accrued interest for any balance remaining after the statement payment due date.
The next statement balance will include any withdrawals and payments made in that month, as well as any unpaid balance from previous months plus the unpaid accrued interest for that month. Once the statement cycle ends, the new statement balance is defined and this amount will be owed. This means that if the new statement balance is paid in full by the statement payment due date, no interest will be owed.
For example, if at the close of a statement cycle, the outstanding balance is -$500.
- This means that if the statement is delivered on the 7th of the next month, the user would be responsible for paying the -$500 statement balance in full by the end of the month to avoid paying interest charges on that balance.
- Please keep in mind that interest will start to accrue on the -$500 statement balance immediately. If payment is made after the grace period (i.e. at or past the end of the month), the user will have to pay all of the accrued interest for the statement balance from the beginning of the current month.
- If the user makes a partial payment before the statement payment due date (i.e. before month-end), the payment will count towards the statement balance due and the user will be responsible for paying the interest accrued on the remaining amount.
Our Advance product allows you to issue interest-free, fee-free, short-term one-time advances to users. Our current implementation only allows for 0% APR advances with no fees per provided advance due to regulatory constraints on payroll cash advances.
If a user is delinquent on one or more loan payments, interest will continue to accrue and compound daily.
Interest will continue to accrue until the loan reaches the cap amount set for the loan. Once interest charges reach the cap amount, interest will stop accruing. Currently, if a credit account has had no positive payments for 90 days or more, we consider the credit account to be in delinquent status.
If a user is delinquent in making their loan payments, as described above, a transaction will be created from your reserve account to the user's credit account to zero out the balance. At that point, the node will be set to
ACCOUNT_CLOSEDas the allowed code. To learn more about which values are allowed, go to Possible Allowed Status Codes.
Once a credit account is terminated, you would find a termination letter (also known as "Loan Termination Adverse Action Notice") in the response (within the
info.agreementsobject in the response with type
TERMINATION_LETTER). You are required to share it with the user via email as this is considered an Adverse Action. To learn more about potential agreement types, go to Possible Agreement Types.
Synapse has added Minimum Payment support to give Platforms the ability to offer relief to consumers that are having difficulty paying their entire balance each month. The Synapse minimum payment feature is in compliance with CFPB guidelines. The minimum payment is configurable on the Platform level via the Synapse Spec Sheet. Once configured, the minimum payment is calculated and added to the consumer's monthly statement. The statement also includes the CFPB minimum payment warning, which calculates the amount the consumer will pay in interest over time if they make only the minimum payment. The promissory note for revolving and open loans contains a new paragraph governing minimum payments.
To spin up a Credit Hub for a user, here are the steps you can follow:
The first step is to create a user account and supply all of their KYC. Once the user account has been created, grab the
refresh_tokenfrom the response which will be needed to issue an OAuth key for the user.
To avoid 2FA, please use the fingerprint value that you used while creating the user account. Once the OAuth key is issued, grab
oauth_keywhich will be needed to launch credit hub.
You have an
ACH-USnode linked to the user profile. This means that the user can repay balances on their credit account via an external bank account or if funds are available on the credit account, the user will be able to cash out into the external bank account.
Before launching a Credit Hub, please ensure one of the following has happened:
- 2.Or, if the product is secured, please ensure that the customer's loan reserve account (
LOAN-RESERVE-US) has been created. If you are issuing an open loan, then you can just issue an open loan without any funds in the customer's loan reserve account since open loans have dynamic limits and are a function of the funds available in the reserve account. But if you are issuing a revolving loan, please ensure that the customer loan reserve account has been funded before issuing a loan.
That's it. You've successfully created a credit account for your user.
Now let's enable some features on this credit account. Please note, these features are available for all credit accounts except Cash Advances.
Now the user's credit account will also have a card number associated with it. The card can be instantly activated for spending online or through the mobile wallet of choice. The card can also be shipped so that the user has a physical card at hand for use. You can also use our virtual terminal to emulate some transactions.
Now your user has a fully functioning Credit Hub! We would also recommend trying the following: