Goldman Sachs launched a new program Monday for consumers whose Apple Card applications have been rejected, offering them a monthly look at what they need to do in order to get approved in the future.
The initiative offers a way for Goldman and Apple to approve more credit card applicants without lowering their underwriting standards.
Since the Apple Card launched last year, the Cupertino, Calif.-based tech giant has sought to approve as many iPhone customers as possible. But Goldman, as the Apple Card’s issuer, needs to worry about the risks that borrowers will fail to repay their loans — risks that have intensified during the coronavirus recession.
The new program, called Path to Apple Card, is analogous to credit counseling.
Certain Apple Card applicants who were rejected will be invited to join the program, according to a Goldman executive who spoke on condition of anonymity. Consumers who choose to participate will receive detailed information about the steps they can take to get approved at a later date, according to the executive.
The program might provide specific advice, for example, on how much existing debt a rejected applicant needs to pay off. Or it might offer personalized information on past-due balances that need to be resolved. Participants will not receive specific credit scores that they need to reach, the Goldman executive said.
In subsequent months, participating consumers will receive follow-up emails describing their progress with respect to the goals that they need to meet in order to qualify for the card. Those who meet the targets within four months or so will receive an email that contains a link where they can reapply, according to the Goldman executive.
Consumers who enter bankruptcy or foreclosure, who have a vehicle repossessed or who have an account that go into collection will no longer be eligible for Path to Apple Card, according to disclosures on Apple’s website.
The Apple Card, which launched in August 2019, is tightly integrated with the iPhone and is meant to appeal to a broad swath of Apple customers. The card offers 2% cash back to customers who pay with their iPhone or Apple Watch.
Apple says on its website that applicants with credit scores below 600 might not be approved, though the company also notes that a range of scores might be considered in conjunction with other factors. Consumers with credit scores below 660 are generally considered subprime.
Goldman, which was not in the credit card business before the rollout of the Apple Card, had $1.86 billion in card loans less than five months after the product’s launch. Growth continued in the first quarter but at a slower rate, with total card loans rising to $2.08 billion as of March 2020, according to a securities filing.
Like other credit card issuers, Goldman Sachs has been offering forbearance on a monthly basis to Apple Card users during the pandemic. The Goldman executive declined to say whether the New York bank has tightened its lending criteria since March and would not divulge the number of Apple Card users who have enrolled in forbearance.
At an industry conference last week, Goldman Sachs Chairman and CEO David Solomon called the Apple Card the fastest-growing credit card of all time. But he also acknowledged that the company’s nascent consumer banking business has work to do to become a major revenue driver within Goldman Sachs.
“If you plopped this business off somewhere else, it would be quite valuable,” he said. “Inside Goldman Sachs, I think at the moment it’s a show-me.”
An Apple executive who also spoke on condition of anonymity said that the new product for rejected applicants was designed with their privacy in mind.
Apple will know whether a particular consumer accepts the invitation to join Path to Apple Card, and will share that information with Goldman Sachs, according to the Apple executive. But Apple will not retain any of that personally identifiable information and will not know additional details about a customer’s participation in the program, the Apple executive said.