Y Combinator-backed ReadyForZero goes live to help trim credit card debt

ReadyForZero, a Y Combinator-backed startup that looks to help card-carrying consumers reduce their credit card debt, announced that it is going live for everyone. The company launched just 6 months ago.

The service lets card carriers connect their credit card accounts online and see just how deep in the hole they are, and offers ways to track and pay off that debt. Users register a certain date when they want to be debt free, or decide on how much they are willing to pay each month. ReadyForZero then sets up a payment schedule and offers a few extra tools to help pay off that debt — such as showing which cards to pay off first or offering loans. ReadyForZero works with a number of independent companies to securely access credit card information and doesn’t store any of that information on its servers.

“Some of this stuff is actionable on your own, we can’t force you to do it,” said ReadyForZero chief executive Rod Ebrahimi. “But we can see whether you’ve done it or not, and we’re able to show [users] some tools they haven’t considered.”

ReadyForZero works with Lending Club to give users a chance to take out loans with a lower interest rate than that on their cards. The loans help users save a little bit of extra cash by effectively cutting the interest rate on part of their debt. For example, a Bank of America credit card might have a 10 percent interest rate, but a Lending Club loan might only have a 5 percent interest rate — so the user shaves off a small amount of debt without doing anything really significant.

The service automatically determines whether its users are able to qualify for Lending Club loans. ReadyForZero is also looking to work with other companies that offer loans and, eventually, the banks that are issuing credit cards themselves. Ebrahimi said the company might add certain milestones for each user that show when they qualify for newer low-interest loans.

ReadyForZero currently makes its revenue by taking a small percentage of each loan. In the future, Ebrahimi said he wants ReadyForZero to serve as a barometer for someone’s credit history — similar to a credit score — when they look to take out a loan by showing statistics and credit history within the service. That’s another service that could also generate revenue, he said.

Ebrahimi also wants to automate debt payments in ReadyForZero so users don’t have to manually track their credit activity. That kind of service could generate revenue through a subscription model, though for the time being ReadyForZero will remain a free service, he said.

“We’re only 6 months old, we’re just sort of figuring this out on the fly as we go along,” he said.

ReadyForZero has raised $260,000 from Y Combinator and a few angel investors like Dave McClure and Steve Chen. It was part of the Summer 2010 Y Combinator class and is manned by “three guys in a garage,” Ebrahimi said.