What Is a Credit Builder Loan?

A credit builder loan is a special type of loan that helps you build credit. It’s not used like a traditional loan, where you can use the loan proceeds to pay for something, then pay it back over time.

With a credit builder loan, you don’t actually get any money from the lender to start with. Instead, when you get the loan, Self will place the money into a savings account on your behalf. You’ll get loan bills like normal and have to make a payment each month.

Each payment you make will show up on your credit report and improve your credit score. However, just like any other loan, late payments or missed payments can damage your credit. It’s important to make sure you can make the monthly payments. If you don’t, your credit builder loan could wind up damaging your credit score.

How Does Self Work?

To get started with Self, you’ll first have to apply for a credit builder loan. You can customize your loan, choosing your desired monthly payment. Options start as low as $25 and go as high as $150. Your payment will affect the term of your loan, which ranges from one to two years.

Once you select the loan you’d like, Self will decide whether to approve your application. There’s no hard pull on your credit and you’re almost guaranteed to get approved since Self is holding your money and taking on almost no risk.

Each month, you’ll make your loan payment, which includes both principal and interest. Over time, your monthly payment will show up on your credit report and increase your credit score. Your payments will also reduce your loan balance.

Once you’ve fully repaid the loan, Self will release the proceeds of your loan to you. This makes a credit builder loan into a sort of forced saving plan that also helps you build your credit.

Keep in mind that your loan payments include interest, so you’ll wind up paying more than you receive at the end of the loan. For example, at the time of writing, Self states that if you choose a $35 monthly payment for a term of 24 months, you’ll get $724 at the end of the loan. However, 24 monthly payments of $35, plus the $9 startup fee total $849.

That means you’ve paid $125 for the service.

Features

There are a few important features of Self that are worth covering.

Reports to All Three Bureaus

There are three major credit bureaus in the United States: Equifax, Experian, and TransUnion.

Different lenders work with different bureaus to check customers’ credit scores. Different lenders also report account details to different bureaus.

Self reports your loan details to all three credit bureaus, which lets you improve your credit score with all three bureaus. That means that future lenders should see your improved score regardless of where they check it.

Close Your Account Early

A Self credit builder loan is a 12 or 24-month commitment. Like any other loan, if you miss payments or make late payments, that will hurt your credit score.

To help people avoid hurting their credit with a credit builder loan, Self offers the option to close your account early if you can’t keep up with the payments or no longer want the service. You can either pay the remaining balance of the loan or simply ask Self to close the account. This will incur a fee of $5 or less depending on your loan.

If you do this, Self will report the account as paid off early to the credit bureaus, which means you don’t have to worry about damaged credit due to a delinquent account.

Self Visa Credit Card

Once you’ve made three monthly payments toward your credit builder loan and have built up $100 or more in savings progress, Self will give you the option to apply for a secured credit card.

You can set the card’s credit limit, up to the total savings progress on your credit builder loan. Once you get the card, you use it like any other credit card, making purchases and paying them off each month.

This card gives you some access to the savings you’ve built through your loan, by letting you borrow against that balance. It also gives you another account to use to build your payment history.

The secured credit card provides a revolving credit line, which in combination with your credit builder loan will improve your credit mix and may help your credit. As with any credit card, you will need to make on-time payments and keep your credit utilization low to build credit.

Read our full review of the Self Visa Credit Card for more information about how this card works.

Pricing

A credit builder loan from Self isn’t free. Even though you get some of your money back at the end of the loan, some of your payments go toward fees and interest, which means you’ll pay more than you receive in the end.

The cost of a credit builder loan depends on the interest rate and fees of the loan. Rates can change regularly, but at the time of writing, the price breakdown looks like this.

If you want the cheapest option, the $48 monthly payment will cost just a bit more than half as much as the next cheapest credit builder loan. However, you should also consider the affordability of the monthly payment.

A longer term will help you build credit, You will accumulate credit history and the account will remain active longer.

Customer Reviews

Customer reviews for Self are mixed. Some customers have had great experiences while others have had significant issues. Many reviews say the service works, but costs too much.

One positive review from Google Play discusses the positive results.

This negative review from Trustpilot mentions that you might see a drop in your credit score. It also claims that the company has added inaccurate data to its credit report.

A middle-of-the-road review mentions that the product works, but is overly expensive.

Self Alternatives

Self is just one of many services available for people who want to improve their credit score. If you’re in the market for a credit builder loan, consider these alternatives.

Is a Self Credit Builder Loan Worth It?

A Self credit builder loan may be worth it to some people.

If your only goal is to build your credit, there are many other ways to do that without having to pay. For example, a student credit card is a good option for younger people. There are many ways to build credit for free.

Even people with damaged credit or who may not qualify for a student card can apply for a secured credit card. With a deposit of a few hundred dollars, you can get a fee-free secured card that you can use to build credit.

However, if you like the idea of having something that forces you to save money while you build credit, a Self credit builder loan may appeal to you. You’ll have to decide whether you’re willing to pay the fees. If you are, then Self can help you build a small amount of savings and improve your credit.

Verdict

A Self credit builder loan is one way that you can build your credit and set some money aside at the same time. While there are free alternatives that will help you build credit, the overall cost is low enough that you might be willing to pay it for the service.

All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A. Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to ID verification and consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report. All loans subject to approval. All Certificates of Deposit (CD) are deposited in Lead Banks, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC.
The Self Visa® Credit Card is issued by Lead Bank, Member FDIC, Equal Housing Lender.

The post Self Credit Builder Loan Review 2024: No Credit Check appeared first on FinMasters.

This guide is here to help you choose the optimal credit builder loan. We’ve assessed nationally available lenders, considering availability, loan terms, APR, credit checks, and more. This should help you decide which credit builder loan is best for you.

How Does a Credit Builder Loan Work?

When you take out a credit builder loan the lender will place the sum you borrowed in a locked account. When you finish making the monthly payments they will release the sum to you, minus interest and fees.

If you have a thin credit file or no credit file a credit builder loan can put an installment loan on your record. If you make on-time payments you will build a positive payment history.

Learn more about how credit builder loans work.

Best Credit Builder Loans

We’ve limited this article to nationally available lenders offering credit builder loans online. Many local and regional banks and credit unions also offer credit builder loans. It’s worth asking your own bank or credit union and searching online for regional lenders that serve your area.

None of these credit builder loans require a credit check, and they all report to all three credit bureaus.

1. Self – Best for building credit and savings in one plan
2. Credit Strong – Best for large loan amount
3. MoneyLion – Best for easy access to funds
4. SeedFi – Best for payment flexibility and costs
5. Digital Federal Credit Union – Credit union membership, low rates, no fees

The descriptions below focus on the highlights, as well as the pros and cons of each lender. Interest rates, loan terms, and loan amounts are presented in the table below for easy comparison.

Compare credit builder loans

Self

Self claims to have helped over 1 million consumers improve their credit. Their program offers two features we really like: the potential for a Self Visa Secured Credit Card (tied to your credit-builder account), and a choice of four different plan levels.

The credit card, if it’s provided, will be secured by the balance in your account after as little as three months. The four different plan levels let you choose the one you’re most comfortable with.

A secured credit card will place a revolving credit account on your credit record along with the installment account of your credit-builder loan, improving your credit mix and adding to your credit-building power.

Self Credit Builder Loan Pros & Cons

Pros:

• Offers four different plans, each with a different loan amount, term, and monthly payment.
• You may be eligible for a Visa secured credit card after just three months of participating in the program.
• No credit check or pre-qualification required.
• Small, transparent setup fee of just $9.
• Reports all three major credit bureaus.
• Available in all 50 states.

Cons:

• Interest rates charged are at the higher end of the range for providers in this guide.

Self Credit Builder Loan Cost

	Small Builder	Medium Builder	Large Builder	X-Large Builder
One-time fee	$9	$9	$9	$9
Monthly payment	$25	$35	$48	$150
Term	24 months	24 months	12 months	12 months
APR	15.92%	15.97%	15.65%	15.91%
Total payments	$600	$840	$576	$1,800
Get back	$520	$724	$539	$1663
Final cost	$89	$125	$46	$146

Self Financial compensates us when you sign up for Self Financial using the links provided.

Start Building Credit with Self

Read our full review of Self

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Credit Strong

Credit Strong offers three types of accounts, each of which targets a different audience. Within each category, there are at least two options.

• Build accounts that prioritize keeping your monthly payment down
• Build and Save accounts that have the shortest repayment terms 
• MAGNUM accounts that have the lowest APRs and highest principal amounts to help users prepare for building business credit

With two Build accounts using minimum monthly payments, loan terms will extend to 120 months. But you can choose 12 or 24 months if you want to complete the program sooner, though it will require higher monthly payments.

A longer loan term will keep your tradeline active longer, extend your credit history, and boost your credit more. It will also add to your total interest cost.

You can cancel the account and remove the money that has been credited, but be careful. The percentage of your payment that goes to interest is much higher early in the loan term. If you cancel early you may get back a lot less than you put in.

Read the loan terms thoroughly before you apply, and be sure you understand them.

Credit Strong Pros & Cons

Pros:

• Choose from seven plans with variable terms. Both improve your credit and build your savings.
• No credit check or pre-qualification required.
• Reports to all three major credit bureaus.
• Available in all states except Wisconsin and Vermont.

Cons:

• Plans with the lowest monthly payment can take up to 10 years to complete. This adds to your credit history but increases your interest cost.

Credit Strong Cost

	BUILD 1000	BUILD 2500	BUILD AND SAVE 1000	BUILD AND SAVE 1100	BUILD AND SAVE 2000	MAGNUM® 5000	MAGNUM® 10000
One-time fee	$15	$15	$15	$15	$15	$25	$25
Monthly Payment	$15	$30	$48	$38	$96	$55	$110
Max Term	10 years	10 years	24 months	36 months	24 months	10 years	10 years
Loan Amount	$1,000	$2,500	$1,000	$1,100	$2,000	$5,000	$10,000
APR	13.5%	7.75%	15.51%	15.73%	14.74%	5.91%	5.85%
First 24 months (36 months for Build & Save 1100)
Total payments	$360	$720	$1,152	$1,368	$2,304	$1,320	$2,640
Get back	$110	$359	$1,000	$1,100	$2,000	$783	$1,566
Final cost	$250	$361	$152	$268	$304	$537	$1,074

Visit Credit Strong

Read our full review of Credit Strong

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MoneyLion

MoneyLion’s Credit Builder Plus program helps you to build your credit and savings and also gives you access to some of your loan funds immediately. It’s also one of the most costly programs on our list: they charge a $19.99 monthly membership fee with the plan.

However, you can earn Lion’s Share Cashback of up to $19.99 per month by using MoneyLion’s RoarMoney mobile banking system. You’ll get your paycheck up to two days early and you can draw interest-free cash advances up to $300 per pay period. You’ll also be able to open a robo-advisor investment account with as little as $5.

The RoarMoney plan comes with a debit card for spending, as well as fee-free access to more than 55,000 in-network ATMs.

MoneyLion claims that over half their Credit Builder Plus customers see a credit score gain of 42 points or more within 60 days.

If you’re interested in the RoarMoney account and the full range of MoneyLion products, the Credit Builder Plus loan is a very solid choice. If you just want a stand-alone credit builder loan the fee will be on the high side.

MoneyLion Credit Builder Plus Pros & Cons

Pros:

• You’ll have access to a portion of the loan proceeds immediately.
• Other financial services provided, including a visa card with cash back rewards and an investment plan.
• Cash advances on your paycheck at up to $300 and 0% APR.

Cons:

• Monthly membership fee of $19.99 for participation.
• Not available in Indiana, Iowa, Montana, Nebraska, Nevada, and Vermont.

Visit MoneyLion

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SeedFi

SeedFi’s Credit Builder Prime also combines the ability to build credit and accumulate savings through monthly payments. You can choose monthly payments of $10 to $40 per pay period. You’ll have the option to make payments weekly, twice monthly, or monthly. You can even choose the due date of the payments, based on your salary schedule.

SeedFi claims that customers see an average 45 point credit score gain with on-time payments.

SeedFi Credit Builder Pros & Cons

Pros:

• Choose the monthly payment plan that works best for you.
• APR is on the lower end of the credit builder spectrum.
• Reports all three major credit bureaus.
• There are no late fees.

Cons:

• You must earn at least $10,000 in annual take-home income to qualify.
• Only available in 33 states.
• Loan amounts limited to $500 only.
• Funds are not available for withdrawal until the program has been completed.

SeedFi Credit Builder Cost

	Plan Costs	Plan Example
One-time fee	$0	$0
Monthly fee	$1	$1
Monthly payment	$10-$40	$20 (Every 2 weeks)
Term	7 – 27 months	12 months
APR	4.03% to 5.26%	4.62%
Total payments	/	$511.96
Get back	/	$500
Final cost	/	$11.96

Visit SeedFi

Read our full review of SeedFi

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Digital Federal Credit Union

Digital Federal Credit Union (DCU) is based in Massachusetts but offers services to customers nationwide. They offer their credit builder loan to help consumers improve their credit while building savings.

There are several advantages to obtaining a credit builder loan through DCU. You will become a member of the credit union. That’ll immediately establish a banking relationship with the potential to offer other programs, like credit cards, loans, home mortgages, and certificates of deposit.

DCU pays dividends on the account securing your loan. That will at least partially reduce the APR you’ll pay on the loan.

DCU Credit Builder Loan Pros & Cons

Pros:

• Loan amounts available up to $3,000.
• DCU’s APR is on the low end of the credit builder loan range.
• There are no fees for a credit builder loan.
• As a member of DCU you’ll have access to other banking programs offered by the credit union.
• Reports all three major credit bureaus.
• Available in all 50 states.

Cons:

• You will need to open a deposit account with DCU to be eligible for the credit builder program. This is standard practice for credit unions.

Visit DCU

Compare Credit Builder Loans

To simplify your choice and the siding on the best credit builder loan for your needs, the table below provides a side-by-side comparison of all 5 lenders. But unlike the descriptions above, it zeroes in on the more specific details of the loans provided and the qualifications required.

If the table below looks confusing, be sure to read our article on costs of credit builder loans to get familiar with the terms and see how each of them influences the amount of money you’ll end up paying.

Lender	Loan amount	Term (months)	APR*	Set-up fee	Monthly Payment	Credit check	Prequalify	3 Bureaus
Self	$520 – $1,663	12 – 24	15.65% – 15.97%	$9	$25-$150
Credit Strong	$1,000 – $10,000	12 – 120	7.75% – 13.50%	$15 or $25	$15-$110
MoneyLion	Up to $1,000	12	5.99% – 29.99%	$0	$19.99
SeedFi	$500	7 – 27	4.03% – 5.26%	$0	$1-$80
DCU	$500 – $3,000	12 – 24	As low as 5.00%	$0	?-$43.87	N/A	N/A

* APRs often change. Check lender websites before applying.

What You Need to Know When Shopping for a Credit Builder Loan

When shopping for a credit builder loan you should fully understand that not all programs are identical. Keep the following factors in mind during your search:

Many lenders require the borrower to provide funds upfront.

That can either be a security deposit representing part of the loan amount requested, or funds for a savings account as full collateral for the loan. If you don’t have the cash, you won’t be able to qualify. None of the lenders we’ve included in this guide have upfront cash requirements.

You won’t have access to the savings account funds.

Though some lenders will give you access to a portion of the loan proceeds, the majority won’t allow you to touch the money until the loan has been paid in full.

There’s no need to pay high interest rates.

Some credit builder lenders charge high interest rates or exorbitant fees, taking advantage of the borrower’s lack of credit. But when you use credit builder loans, like those offered by the lenders on this list, interest rates and fees should be in line with other types of personal loans.

If you don’t make your payments on time you’ll have another negative credit entry.

A credit builder loan will only improve your credit if you make your payments on time. Late payments will be reported to the credit bureaus and could harm your credit.

Be sure the lender reports to all three major credit bureaus.

The three major credit bureaus are Experian, Equifax, and TransUnion. Since each issues its own credit report and credit score, you’ll want to make sure the credit improvement occurs on all three. It will do you little good to have an improved credit score on one, but not on the other two. Look for lenders that report to all three credit bureaus.

Bottom Line

If you’ve been having difficulty building or improving your credit score, credit builder loans are a possible solution. In many cases, the credit builder loan will also help you to build savings.

You will be paying to build credit, but if you need to develop a credit score and have no other realistic option, it can be worth it. Be sure to assess what you will pay and how much you expect to improve your score, and decide whether it’s worth it.

Remember that people with thin credit files will see the biggest score gains.

For many people struggling to get out of the financial starting gate, the combination of the two benefits coming from one loan product makes credit builder loans a solid strategy.

FAQs:

All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A. Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to ID verification and consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report. All loans subject to approval. All Certificates of Deposit (CD) are deposited in Lead Banks, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC.
The Self Visa® Credit Card is issued by Lead Bank, Member FDIC, Equal Housing Lender.

The post 5 Best Credit Builder Loans in 2024 | No Credit Check appeared first on FinMasters.

Credit Strong is legit, and their accounts can definitely boost your score if you use them correctly. They’re especially effective if you have a thin credit file with a small number of accounts.

They also have several options to choose from, which lets you prioritize the type of account and the terms that are most appropriate for you.

You’ll have to pay interest and fees for the privilege, so it’s not the cheapest way to raise your score. There are ways to build credit for free.

What is Credit Strong?

Credit Strong’s primary purpose is to build credit, and it does a reasonably good job. They claim to have studied 50,000 of their customers’ accounts and found that people saw the following changes to their FICO 8 score on average:

• A 25-point increase within three months
• An almost 40-point increase after nine months
• Just shy of a 70-point increase after a year if they made all payments on time

People who started the process with no score and paid on time for a year finished with a credit score between 630 and 650.

These are solid results but not irreplicable. You could probably get the same or better results by sticking with a traditional installment loan for a year.

The advantage of Credit Strong is that it’s easy to qualify for their accounts. They hold onto your loan proceeds until the end as collateral, so they don’t even have to check your score.

In addition to helping you build credit, Credit Strong claims that they help you save money. That’s true in some sense, but only in that signing up for your monthly Credit Strong payments commits you to put some of your paychecks aside.

Once you’ve paid off your account, you get back the portion of your monthly payments that went toward paying off the principal amount of the loan.

You’d save far more money if you just committed to putting the same amount each month into a savings account, so don’t use Credit Strong as a way to save money.

Build credit while you save money. No credit required, no security deposit, easy approval!

Start Building Credit →

How Does Credit Strong Work?

Credit Strong offers several types of accounts, all designed to help you build credit.

Instal

Credit Strong’s Instal product offers credit-builder loans. These loans work like reverse installment loans. The money you borrow is placed in a locked account. You make monthly installments toward principal and interest. When the loan is fully paid, the entire sum is released to you.

Because Credit Strong keeps the money, there’s no real risk to them. They can offer loans with no credit check.

You can choose from three plans. Each plan carries a one-time fee of $15 and a 15.61% APR.

• The 24-month plan has a $48/month payment and reports a $1,000 installment account. You get 24 months of credit history, and you get $1000 at the end of the loan period.
• The 36-month plan has a $38/month payment and reports a $1,100 installment account. You get 36 months of credit history, and you get $1,100 at the end of the loan period.
• The 48-month plan has a $28/month payment and reports a $1,010 installment account. You get 48 months of credit history, and you get $1,010 at the end of the loan period.

Longer loan terms will have a greater impact on your credit score, as you will build the length of your credit history and your payment history simultaneously. Of course, you will have to make on-time payments to build credit effectively!

You can cancel the loan, and the money you have paid toward the loan principal will be refunded. You should be aware that a large percentage – up to 44% – of your early payments will be applied to interest. If you cancel early, you may get less back than you expect!

Revolv

Credit Strong’s Revolv product adds a revolving credit account to your credit file, making it a good choice if you are already paying an installment loan (like a student loan) but don’t have a credit card.

If you have a credit card already, Revolv can increase your credit limit, which can lower your credit utilization and boost your credit.

As soon as you open your account, a $500 revolving credit account will be reported to the three major credit bureaus. You choose an amount to pay monthly, which is placed in a locked account. 100% of this amount is released to you when the account matures.

If you make three on-time payments in a row, you will get a $100 credit limit increase, up to a maximum of $1000. This should further improve your credit utilization. You’ll also get free FICO score access.

The account works as a digital credit card with a 0% APR.

Revolv requires a $99 annual subscription.

CS Max

Credit Strong’s CS Max is a specialty product designed for people who “have the cash but not the credit”. It’s a credit-builder loan but with much larger amounts than the Instal loans.

CS Max is designed for borrowers who want to place a larger loan on their record to demonstrate that they are capable of managing larger credit obligations.

All CS Max loans have 60-month terms, a one-time $25 administrative fee, and a 6.99% APR. The four plans vary only in their sizes.

• $49/month, reporting a $2500 installment account.
• $99/month, reporting a $5000 installment account.
• $199/month, reporting a $10,000 installment account.
• $449/month, reporting a $25,000 installment account.

All plans can be cancelled at any time without penalty.

These plans will adda substantial amount to your debt-to-income ratio, so they are probably not a good idea if you are considering applying for a mortgage or car loan soon.

Be sure that you can make the payment you commit to, because late payments will harm your credit score.

Credit Strong Business Accounts

Credit Strong’s business accounts are designed to build a business credit profile for businesses that have an EIN (Employer Identification Number). These accounts work much like the Instal account, but for a business.

There are several plan options, all with 25-month terms.

• A $100/month plan with no interest but a $349 one-time fee, reporting a $2500 installment account.
• A $115/month plan with a $149 one-time fee and a 13.26% APR, reporting a $2500 installment account.
• A $200/month plan with no interest but a $549 one-time fee, reporting a $5000 installment account.
• A $220/month plan with a $199 one-time fee and an 8.96% APR, reporting a $5000 installment account.
• A $400/month plan with no interest but a $749 one-time fee, reporting a $10,000 installment account.
• A $440/month plan with a $299 one-time fee and an 8.96% APR, reporting a $10,000 installment account.

The interest-free plans have lower total costs but a higher up-front cost.

These accounts report to Equifax, Paynet, and SBFE, with plans to add Dun & Bradstreet and Experian.

How to Sign Up for Credit Strong

Signing up for Credit Strong is a lot easier than applying for a traditional installment account. They don’t pull your credit report or check your credit score, so the only requirements for getting an account per their website are:

• Have a cell phone number, Google Voice account, and email address.
• Be 18 years old and a permanent U.S resident with a physical U.S. address.
• Have a valid social security number or individual taxpayer identification number.
• Have a checking account, debit card, or prepaid card in good standing.
• You will need an EIN number to use the business products.

Credit Strong is available in every state except for Wisconsin and Vermont. These states have laws that prevent secured consumer lending or make it too costly to implement.

You can sign up by filling in the application form on Credit Strong website.

How to Use Credit Strong

While your Credit Strong account is open, you make payments on it like any installment debt. The amounts go to both principal and interest, with more going toward interest in the earlier years.

You can make your payments through your checking account or debit card, including some prepaid cards. There are often fees if you pay with a card, so it’s better to use your bank account.

Tip: You can set up an autopay to make sure you never miss a payment. If you don’t, you have a 14-day grace period before they’ll report you as late and charge you for it.

As you make your payments, Credit Strong reports them to all three major credit bureaus: Experian, Equifax, and TransUnion. They’ll give you your Transunion FICO 8 Score monthly so you can monitor your progress as you go.

How to Cancel Credit Strong

One of the primary benefits of credit builder loans like Credit Strong is that they generally let you cancel your account at any point. That significantly reduces the risk of you hurting your score because you can’t afford your payments.

There are no fees for canceling, and you’ll get back any principal that you’ve accumulated to that point. The easiest way to tell Credit Strong that you don’t want to continue is to call their customer support at (833) 850-0850.

Important Note on Cancellation: If you cancel your loan you will get back the money that has been applied to your loan principal. In the early stages of repayment, Credit Strong applies most of your payment to interest. If you cancel early you may get back only a small amount of what you put in.

Credit Strong Pricing

Credit Strong offers several types of installment accounts and one revolving credit option, each targeting a different audience. Within each category, there are at least two options, all with different pricing.

The Credit Strong website has clear pricing information, so when you’ve identified your preferred option you can check the cost and compare with other options.

You always have the option to pay your balance in advance or cancel your account entirely, so the repayment terms aren’t a requirement. Cancellation will reduce the account’s impact on your credit by reducing the number of timely payments you make.

The account will remain on your credit report after it is paid off, but its impact on your credit score will be greatest while the account is active.

Build credit while you save money. No credit required, no security deposit, easy approval!

Start Building Credit →

Credit Strong Customer Reviews

Like many credit-related products and services, Credit Strong receives mixed customer reviews. It’s hard to find an accurate average rating for them because crowdsourced reviews often include fake profiles, and upset people are more likely to leave comments.

However, there are some noticeable trends.

For example, many of their negative reviews are due to confusion over how the accounts work. People who apply expecting to get an installment loan are, of course, going to be severely disappointed.

Here’s an example from Google Reviews.

Similarly, people often fail to look at the amortization tables that break down their principal and interest on their accounts. They cancel early and are surprised that they won’t get back most of their money.

Here’s an example from the Better Business Bureau.

There are some complaints from people who have difficulties logging into the account or found the customer service people unhelpful. But for the most part, users who understand the nature of credit builder loans are often satisfied with their results, more or less. 

Here’s another example from Google:

The lesson from these reviews is simple: if you understand the product before you sign up, you’re less likely to be disappointed.

Credit Strong Alternatives

There’s no shortage of credit builder loans on the market, and all of them follow a similar pattern. You can apply and qualify without a credit check. Once you get approval, you make payments until you’ve paid off the principal balance, at which point you’ll get that amount back in cash.

There are differences in their terms, though. Here’s an overview of some other options.

Before applying for a credit-building account, make sure you confirm that it reports to all three credit bureaus. Some products don’t.

Learn More: Read our detailed comparison of the best credit builder loans available today to see how Credit Strong measures up.

Is Credit Strong Worth It?

Credit Strong can legitimately help you rebuild a damaged credit score or create one from scratch. It’s most effective if you have a thin credit file with few or no installment loans.

If you are starting out with credit building, you may have revolving credit, like a secured card or even being an authorized user on someone else’s card, on your record. If you don’t have an installment loan on your record (like a student loan or car loan), a credit builder loan could be an effective way to improve your credit.

The main problem with Credit Strong is inherent to credit builder loans in general. You’re paying money for the privilege of building your credit.

Say you take the $15 Build Credit Strong account and keep it open for a year. You’d end up putting $180 into the account after twelve months, but if you cancel then, you’d only get back $52.

If you use a secured credit card instead, you could build your credit without paying interest. It won’t diversify your credit mix if you lack installment accounts, but it should be about as effective at improving your score over time anyway. Payment history is more important to your credit score than your credit mix.

The downside to secured cards is that you have to fund a deposit (which will tie up some money) and undergo a credit check. You also don’t have the luxury of canceling your account for free if you think you’re going to miss a payment.

However, you can get a secured card with a deposit as low as $200. Because of the cash collateral, they’re easy to get even with bad credit. Once you have the account, you can spend as little as you need to build credit without risk.

If you do decide that a credit builder loan is the right move for you, Credit Strong offers a very useful product that’s worth considering. The main question you’ll need to answer is whether you want to use a credit builder loan or not.

How We Review the Products in This Category

We rate products by comparing them to similar products. In this case, that means comparison to other credit builder loans and, to a lesser extent, to other credit-building tools. Here’s a summary of the rating criteria.

Effectiveness

This is based on the number of credit bureaus reported to, the type of account reported, and the length of history provided. Credit Strong reports an installment loan to all three major credit bureaus for a relatively high score, reduced only for a potentially short loan term.

Cost

Building credit doesn’t have to cost money. Credit-builder loans can run up substantial interest expenses and generally get mediocre marks in this category.

Ease of Use

Ease of use is primarily determined by user reports from customer reviews. Most reports suggest that setting up a Credit Strong account is easy and straightforward, hence the high score.

Support

Support scores are also based largely on customer reviews. All products have some issues, and you want to be sure that you can get quick and effective solutions if something goes wrong. Reviews indicate some customer service issues with Credit Strong. These may be partly due to misunderstanding or unreasonable expectations on the part of some users, but there’s still cause for concern.

The post Credit Strong Review for 2024: Is Credit Strong Worth It? appeared first on FinMasters.

LOQBOX launched in the UK in 2017 and opened to US consumers in 43 states in September 2020. It’s similar to a credit-builder loan, but there’s no interest. If you release your savings into a new account with a partner bank you won’t even pay any fees: LOQBOX makes its money from a commission paid by the partner bank.

LOQBOX looks like a solid, reliable, and debt-free credit building solution. It’s secure, the cost is low, and it can be combined with other credit-building strategies for an even faster credit boost.

It’s still a relatively new service in the US, so it remains difficult to assess effectiveness or customer service.

How Does LOQBOX Work?

The service works like a credit-builder loan, with some differences. Instead of applying for a specified loan amount with a monthly payment fixed by the lender, you set a savings target for the year. LOQBOX puts that money in a secure account, and you pay it off in installments.

LOQBOX reports your payments to Equifax, Experian, and TransUnion, building your credit, and when the amount is paid up you get the money, which builds your savings.

If you withdraw the sum to your own bank account, you’ll pay a $40 fee. If you set up an account with a LOQBOX partner bank and draw the sum into that account, the entire process will be absolutely free.

As the name implies, your account acts like a locked box to protect your savings while building credit. At the end of a 12-month period, you can unlock your account and access the savings. You can unlock early without penalty. LOQBOX is easy to set up in a few minutes. There’s no interest, no hidden fees, and there’s no credit check.

You can select any monthly payment between $20 and $200 (in $5 increments). The sum you withdraw at the end of the year will be from $240 to $2,400.

For Example

Suppose you decide to save $100 a month. You’ll get a 0% APR loan for $1,200. You’ll receive a cash-redeemable voucher.

Each month, you’ll pay $100. You can make the monthly payments either by direct debit from your bank account or by debit card payments. 

LOQBOX reports these monthly on-time payments to the three main credit bureaus: Equifax, Experian and TransUnion. This builds credit history and payment history, as long as you don’t miss a payment or make a late payment.

At the end of each 12-month period, you have the choice to transfer your funds to one of LOQBOX’s partner savings accounts, or to your personal checking or savings account for a $40 fee. You can withdraw early without penalty.

How is LOQBOX Different From a Loan?

LOQBOX is different from a loan in several respects. A few key differences are:

• No credit checks
• No interest

You do not receive the cash value of a loan. Instead, you buy a cash redeemable saving voucher and finance the purchase with a loan.  

LOQBOX Features

Here are some of the key features of LOQBOX.

Reporting period

LOQBOX reports payments monthly. The initial loan might lead to a temporary credit score dip: this often happens when you first open a new credit account. You should see improvements in your credit score within three to four months. 

Savings Limits

You can save between $20 and $200 per month. That means the maximum 12-month savings limit is $2400 and the minimum is $240. 

Unlocking Early

If you choose to unlock early, you will receive everything you have saved until that point. You can choose to open a new savings account with one of LOQBOX’s list of partners or use the Flexi Unlock feature ($40) to have the funds transferred to any bank account. 

If you unlock within the first 3-4 months you will probably not see a noticeable improvement in your credit.

Late Payments

LOQBOX will report late payments, which can hurt your credit. The Company recommends that if you’re having trouble making payments, you should close your account and withdraw your money. You won’t get the full credit-building benefit, but late payments will hurt more than keeping the account open will help.

Payment Date

When you sign up, you can select any payment date for the monthly automatic account deduction or debit payment. Choose this date carefully, as you will not be allowed to change and any late payments will hurt your credit score. After the first month, you can change the payment date within the same calendar month, as long as it is not in the past. 

Customer Reviews

As with any credit-building product. LOQBX reviews cannot be taken as an absolute indicator, either positive or negative. Many negative reviews of credit-building products indicate a poor understanding of the service, its limitations, or the realities of building credit. Some companies may also seed positive reviews.

Within those constraints, how does LOQBOX look in the review process?

Because the service is quite new in the USA, most online reviews are from the UK. The UK reviews, with the largest number hosted on Trustpilot, are generally good. The Company gets an average of 4.6 out of 5 stars from 16,305 reviews.

In the US reviews are less impressive, though the number of reviews is too small to reach any clear conclusion.

At this point, we’d say that there are not enough LOQBOX reviews from US customers to reach a conclusion about the Company.

LOQBOX vs Self

Self credit-building loans work on the same principle as LOQBOX. You are approved for a loan amount between $520 and $3,076, and you make monthly payments until that loan amount is paid in full. You don’t receive any cash, but build savings to cover the loan. After the designated savings period, the funds are transferred to your bank account. 

While the credit-building formula is similar, there are key differences to be aware of. Here is our Self vs. LOQBOX review:

Fees

LOQBOX doesn’t charge any fees for their basic service, while Self does. 

Self’s fees are: 

• $9 administrative fee for account setup.
• $0.30 + 2.99% convenience fee for payments by debit card. On $100, that would be $3.29.
• Maximum early account closing fee of $5.

In contrast, LOQBOX charges a fee of $40 only if you choose to deposit the funds into a bank account that is not one of their savings partners. Even if you unlock early, you can do it fee-free by opening an account with a partner bank.

Credit Checks

While neither Self nor LOQBOX performs a hard inquiry credit check, Self partners with ChexSystem to determine eligibility and to access banking history. Self states that they don’t turn down applicants based only on credit scores, but that implies that credit scores could contribute to a decision to turn down applicants.

LOQBOX does not perform any credit checks and doesn’t turn down customers based on credit scores. 

LOQBOX does not perform any #credit check and doesn’t turn down customers based on credit score . 

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Length of Savings Period

With Self, you can choose between 12-months or 24-months repayment options on the “loan”. With LOQBOX, at present, there is only a 12-month option. You can, of course, choose to take a second 12-month LOQBOX to extend the 12 months to a 24-month period. 

Monthly Payment Amounts

Self gives you four different monthly payment options: $25, $35, $48, or $150. In contrast, LOQBOX lets you select any monthly payment amount between $20 and $200 in $5 increments.

Accessibility

Self is available in all 50 states, while LOQBOX is only available in 43 states. The service is not available in Alabama, California, Delaware, Georgia, Idaho, Indiana, Louisiana, Mississippi, Missouri, Nevada, New Mexico, North Dakota, Rhode Island, or South Dakota. 

Credit Bureau Reporting

Both Self and LOQBOX report to all three credit bureaus.

FAQs

The post LOQBOX Review (2024): One of the Cheapest Ways to Build Credit appeared first on FinMasters.

What is Cheese?

It’s not something you find on a cheeseburger. Cheese is a relatively new company that provides credit-builder loans. Credit score tracking and rent reporting services are expected to launch by the end of 2023, but for now, it’s all about the credit-builder loan.

Cheese is not a bank or a lender. Banking services and FDIC insurance are provided through Synapse, a banking software provider.

Cheese previously offered an online debit card account. This product was fully discontinued in December 2022, and the Company is now focused on credit-building products.

What is a Credit-Builder Loan?

A credit-builder loan is an installment loan that is designed to build your credit record.

Unlike a regular installment loan, you don’t get the money upfront. Instead, the money goes into a locked savings account. You make monthly payments, and when the loan is paid, the entire sum is released to you.

This arrangement almost completely eliminates risk to the lender because the money stays under their control until the loan is fully paid. That makes it possible for them to offer these loans to people with low credit scores or no credit scores.

A study by the Consumer Financial Protection Bureau (CFPB) found that credit builder loans can help build credit, especially for people without existing loans. Borrowers without existing debt increased their credit scores by 60 points more than those with existing debt.

The Risk

Like any form of credit, credit-builder loans are most effective if you make every payment on time. The CFPB study found that 39% of credit builder loan users made at least one late payment.

If you use a credit builder loan from any provider, it is critically important to make payments on time. Fortunately, these loans typically have low monthly payments.

Cheese will deduct your payment automatically from your linked bank account, but you’ll still have to be sure that you have enough money in the account to cover the payment.

How Does Cheese Work?

Cheese offers credit builder loans with terms of 12 and 24 months. A longer loan term will help you build your credit history. Your payments will be reported to the three major credit bureaus: Experian, Equifax, and TransUnion.

These are the plans Cheese currently offers.

Late or missed payments can harm your credit, so choosing a plan with a low monthly payment will generally be a good idea.

The process of using Cheese is as simple as eating cheese.

• Download the Cheese app. There are versions available for Android and iOS.
• Choose your plan.
• Fill in your name, phone number, address, birthday, and Social Security number.
• Link your bank account.
• Apply for a loan. There’s no credit check.
• Cheese will debit your payments directly from your linked bank account. You can’t forget and accidentally make a late payment.
• Get your money in a lump sum when the last payment is completed. Cheese will pay it directly into your linked bank account.

Not all of the money you pay will come back to you. Some will go to interest payments. A credit builder loan is still a loan, and it isn’t free.

Your interest rate will depend on the state you live in.

Cheese credit builder loans are not available in AL, IN, KY, NV, PR, VT, VI, WA, or WI.

Cheese uses Finicity, a provider similar to Plaid, to connect to your bank account. You must use a bank or credit union that is compatible with Finicity to use Cheese. You can search this list to see if your bank or credit union is supported.

Requirements

Cheese credit builder loans do not require a credit check or even a credit score. There are still some requirements.

• You must be over 18 and a citizen or legal resident of the US with a valid Social Security number.
• You must live in a state where Cheese provides service.
• You must have an internet connection and an Android or iOS device capable of running the Cheese app.
• You must have a verifiable email address, phone number, and street address.
• You must have a bank account that is compatible with Finicity that you can link to Cheese.

If you meet these requirements, you should be eligible for a credit-builder loan.

Paying Your Loan

You do not have to send your payment to Cheese. They will deduct it from your linked bank account. You will receive an email reminder three days before the scheduled payment.

If your account does not have sufficient funds, Cheese will not report a late payment immediately. They will contact you and try to work out a payment schedule. If you cannot pay, you will have the opportunity to close the account without penalty.

If you ignore the payment and do not close the account, a late payment will be recorded on your credit record, which will harm your credit.

Chees will not charge a fee if your account has insufficient funds, but your bank may charge an overdraft or insufficient funds fee. These fees can be substantial. Be sure you have enough in your account to cover the payment.

The default payment date is the business day after you open your account. If you are opening a Cheese account, plan ahead and open it at a time of the month when you typically have money in the account, like after a payday.

Closing Your Account

You can close your Cheese account at any time. The account will be listed as closed and fully paid on your credit report. You won’t get continuing credit score benefits, but your credit won’t be harmed.

The money you have paid into your Cheese account will be paid into your linked bank account minus interest.

It’s important to note that while your monthly payment is fixed, the percentage devoted to interest is not. Your early payments bias heavily toward interest, while later payments are almost entirely devoted to the principal. This is a common arrangement among credit-builder loan providers.

What this means in practice is that if you close your account early, you’re likely to get back substantially less than what you paid in because a larger portion of those early payments went to interest. Be aware of that if you’re considering canceling.

How to Use Cheese

Credit-builder loans can be an effective way to build credit. That doesn’t mean they will be equally effective for all users. It’s important to know how to use a credit-builder loan and whether you’re a good candidate for one.

Credit-builder loans are most effective if you have a thin credit file or no credit score at all. If you’re in this position, a credit-builder loan is a convenient and affordable way to put an installment loan on your credit record.

You should pay attention to your credit mix. Credit scoring models reward you for having both installment loans and revolving credit (credit cards) on your record.

If you already have an installment loan (like a student loan), but you don’t have a credit card, a secured credit card might be your best credit-building option. Users with a credit card but no installment loan will get the maximum benefit from a credit-builder loan.

If you have nothing in your credit file at all, a secured credit card and a credit-builder loan make a great combination.

If your credit record is already full – for example, if you’re trying to recover from serious credit damage – a credit-builder loan will be less effective. It will help as long as you make all payments on time but don’t expect a dramatic impact. You might be better off focusing on managing your existing accounts well.

Customer Reviews

Interpreting Cheese customer reviews is tricky because many of the existing reviews are based on the Cheese online debit card account, which is no longer offered. We need to focus on the reviews that deal with the credit-builder loan.

Cheese gets 4.6 of 5 stars on the Apple App Store page. Negative reviews are primarily aimed at the debit card account. Reviews of the credit builder loan product are generally positive. These are some examples.

Cheese gets 3.5 of 5 stars from 887 reviews on the Google Play Store. Again the negative reviews are primarily based on the online debit card.

There are negative reviews of the credit-builder loan product, but some of them highlight a common problem with online reviews of financial products, Here’s an example.

The reviewer clearly has no idea how a credit-builder loan works or what he signed up for. He’s disappointed, but it’s not a problem with the product. The lesson here is to be sure that you understand the product before you sign up!

Cheese is not accredited by the Better Business Bureau (BBB) and has an F rating. Again, all of the complaints relate to the now-closed online debit card account.

The Bottom Line: Is it Worth It?

Credit-builder loans are an effective and affordable way to place an installment loan on your credit record. If you have a thin credit file or no credit record, they can help you establish a credit history.

Cheese offers a straightforward, basic credit-builder loan product. If you have decided on a credit-builder loan, it is certainly worth considering.

Some competitors may offer a wider range of options and other products, but that is only a factor if those options and products fit your needs. As with any financial product, the key is to identify your needs and select products that meet them.

Check out our review of the best credit builder loans to see how Cheese stacks up.

The post Cheese Credit Builder Review 2024: Build Credit and Savings appeared first on FinMasters.

What Is SeedFi?

SeedFi provides financial services to borrowers with no credit history or compromised credit. 

It is an entirely respectable business licensed in 32 states, plus the District of Columbia. It has direct relationships with several banking institutions. 

SeedFi reports your payment history to all three credit bureaus – TransUnion, Equifax, and Experian.

How Does SeedFi Work?

SeedFi offers a credit-builder loan that enables borrowers to begin establishing credit and save money at the same time.

Credit Builder Prime

Credit Builder Prime is a credit builder loan. It’s available with no credit check, making it an ideal choice for people who have yet to establish a credit score. It is designed to leave the borrower with both improved credit and money on hand. All you have to do is make your payments on time.

The plan provides customers with a standard $500 loan. The money is immediately transferred to a savings account, where it remains until the loan is repaid.

Borrowers can select a payment amount between $10 and $40 every payday. The loan term is determined by the amount of the installments, with higher payments resulting in shorter loan terms. Payment schedules are matched to customers’ paycheck cycles. When the loan is paid off, the full sum is available for you to use.

Unlike many credit builder loans, SeedFi does not charge interest or fees. A flat monthly fee of $1 is collected from your payments. This lets you start building credit with as low as $12 a year in out-of-pocket spending.

Credit Builder Prime allows a continuing credit builder loan. When your first loan is paid off, the money will be transferred into a second account that’s available for you to use. Another $500 will be transferred into the first account, and you’ll keep making your payments. When that $500 is paid, the cycle repeats.

This system allows you to keep a continuing installment loan with on-time payments on your credit report and save from $20 to $80 a month for a $1/month fee. That boosts the credit-building potential of the project: the account stays open and adds to the length of your credit history.

Closed accounts affect your credit less than open ones!

SeedFi offers some flexibility if you are having financial difficulties. Even if you do not contact customer service, if you are 29 days late, SeedFi will assume financial distress and automatically shut down your account. That means SeedFi will never report a late payment to the credit bureaus.

Eligibility Criteria

To be eligible for Credit Builder Prime you must:

• Be a resident of one of the states where SeedFi is licensed to operate.
• Be at least 18 years of age or 19 years in Nebraska and Alabama.
• Provide your birth date and Social Security number.
• Provide a phone number and verifiable email address.
• Have an electronic payment option.

Keep in mind that individual results may vary. Using Credit Builder Prime is not guaranteed to increase your credit score. It’s important to make on-time payments, but other factors can affect your credit score, including performance on other credit accounts.

SeedFi Customer Reviews

SeedFi’s ratings on Trustpilot are mostly positive, standing at a solid 4.8/5 and an A+ on the Better Business Bureau website.

The majority of reviews praise SeedFi’s customer care service and emphasize how simple and convenient it is to use.

However, some negative reviews indicate that the company is not always straightforward with how they handle their customer’s accounts.

A majority of SeedFi clients report that customer care service providers are thorough in their explanations of SeedFi’s services and that loans are processed quickly and efficiently. Some reviewers expressed dissatisfaction with the product’s functionality or the loan cancellation process.

It is common for relatively new companies to experience some problems with both their technology and their customer service systems. The generally strong reviews indicate that these cases are rare but you should be aware that they have happened.

Is SeedFi Worth It?

SeedFi loans are reasonably priced and simple to pay off. They leave you with money in a savings account, which can help you meet your financial goals.

SeedFi’s products are intended for a specific market: people with no credit or poor credit.

Credit Builder Prime provides an easily accessible, low-cost credit building product that also leases the borrower with savings. It’s a great option for people with no credit score or a thin credit file who want to add accounts to their credit histories.

If you have a more complicated credit history and you’re looking to repair credit rather than build it, the impact may be less visible.

SeedFi offers easily available low-cost, low-risk credit-building options. They are solid options for adding an installment loan to your credit history and building a strong payment history.

SeedFi Alternatives

Many credit unions and community banks offer credit-builder loans. Several national lenders also provide these loans. Credit Strong and Self, for instance, both offer credit-builder loans.

SeedFi’s cost of $1 per month, on the other hand, is much lower than the costs of both of these competitors.

You can find detailed price comparisons and guides on how to pick the best option for you in our guide to the best credit builder loans.

Naturally, individuals with excellent credit will have other options. SeedFi caters to individuals who lack access to credit and provides an excellent alternative to a high-interest title or payday loan.

Let’s look at how SeedFi compares to its main competitors, Credit Strong and Self. In order to understand how to compare these costs you might want to read up on all the factors that influence the cost of a credit builder loan.

Before you start comparing the costs, be sure to get familiar with the ins and outs of how credit builder loans work.

The post SeedFi Review (2024-Ready): Build Credit & Save Money appeared first on FinMasters.

This review will focus on the credit-building feature, but you’ll want to be aware of the other options as well. They’re included in the package and they will influence your decision on the overall value of the package.

Brigit provides you with an interest-free Credit Builder Loan. You make monthly payments of as little as $1, and Brigit reports your payments to all three credit bureaus.

How Brigit Credit Builder Works

You start by signing up for an account with Brigit. The account costs $9.99 per month. That sum covers all of Brigit’s services.

Brigit will assign you a “Brigit score” based on your bank account activity. There is no credit check.

If you decide to use the app’s credit-builder function, Brigit will create a credit builder installment loan and deposit the money in an account with Coastal Community Bank. Brigit determines the amount of the loan, based on your Brigit score. 

You make payments on the loan. This is done in two parts:

1. You pay an amount you select, ranging from $1 to $50.
2. The rest of your payment is made from your deposit account where your loan is kept. That loan is housed with Coastal Communirty Bank.
3. Brigit reports your monthly payments to the three major credit bureaus. 
4. When the loan is fully repaid, you get all of your contributions to the payments back. 

There is no interest on the loan. You simply pay the $9.99 monthly fee. You’ll also have access to Brigit’s other services.

Brigit Credit Builder Plan Details

Brigit Credit Builder is a single plan. You subscribe to the app and pay $9.99 per month. You may then apply for the Credit Builder program.

Brigit will decide, based on your Brigit score, if you should have a 12-month or 24-month payment plan. Brigit also determines the size of the loan.

Tip: Larger loans may have a greater impact on your credit, though there are many variables. In general, the impact of a credit-builder loan will be greatest if you have a thin credit file with a limited number of entries.

A payment that’s over 30 days late will be reported as a late payment, which can do serious damage to your credit score. If you will not be able to make a payment, contact Brigit to review your options.

If you’re worried about your ability to make payments, select the most affordable payment option. With monthly payments as low as $1 available there is no reason to make late payments.

Qualifying for a Brigit Credit Builder Account and Loan

To qualify for the Brigit credit builder loan you must have:

• A bank account that has been open for a minimum of 60 days. 
• You must connect your bank account to Brigit.
• You need to have activity in your bank account for 2 out of every 10 days so Brigit knows it is an active account. Your personal checking account works best for this.

Customer Reviews

Customer reviews of Brigit are generally positive. The app has an average of 4.8 of 5 stars from 222.3k ratings on the Apple App Store and 4.6 of 5 stars from 121k ratings on Google Play Store.

Positive reviews typically state that the service functions well. For example:

Negative reviews primarily focus on customer support and unclear reasons for an individual’s inability to qualify.

While the overall impression of the reviews is positive, you should be aware that some customers do report customer service problems and other issues.

Brigit Credit Builder Alternatives

How does Brigit Credit Builder stack up against competitors? There’s no other service offering exactly what Brigit offers, so we’ll compare the service to a range of other credit-builder loans. For details on the other options, see our review of the best credit-builder loans.

Note that comparison of total costs may be difficult. Brigit charges only a monthly fee. Some credit-builder loans charge a fee plus interest, others may charge only interest. If the loan charges interest your total loan cost will vary with the amount you borrow and the loan term.

Brigit and MoneyLion – the most similar service among those reviewed above – also bundle other services with their monthly fee.

One difference between Brigit and other credit-builder loans we’ve reviewed is that Brigit pays part of your loan payment from the loan proceeds. On the positive side, this allows for very low monthly payment options. On the negative side, it limits the lump sum available to you at the end of the loan term.

With other credit builder loans you pay back the entire sum you borrowed, and that sum, minus interest, is available to you at the end of the loan term. With Brigit, you pay less than the total loan amount because part of the loan payment is made from the loan proceeds. The amount available to you at the end of the term is equivalent to the payments you have actually made. If you selected a low payment amount this sum could be quite small.

If your priority is building credit with the smallest possible monthly payment, Brigit will be an attractive option. If you’re trying to save a lump sum at the same time it may seem less appealing, though you can choose to pay the entire monthly payment and take the lump sum at the end of the loan.

The Verdict

Brigit places a new installment loan tradeline on your credit record with minimal risk.  Your cost is $9.99 per month, and you can cancel at any time with no penalty. Since you can pay as little as $1 per month, your commitment is small and late payments are easy to avoid. You never have to upgrade, because there is only one plan. 

Brigit will be most effective for individuals who have no credit record or not enough information in their credit record to generate a credit score.

Because Brigit Credit Builder places an installment loan on your record, it is ideally paired with a secured credit card, which will place a revolving account on your record and improve your credit mix.

Your decision on the Brigit Credit-Builder loan program will also depend on whether you plan to use Brigit’s other services. Your $9.99 per month gets you optional cash advances up to $250 (depending on your Brigit score), budgeting tools, identity theft insurance, and other services.

If you expect to use all or most of these services you’ll probably see the fee as good value. If you are looking exclusively for a credit-builder loan and you won’t be using the other services you might be better off with a stand-alone credit builder loan.

The post Brigit Credit Builder Review (2023) appeared first on FinMasters.

You will be paying to build credit, but if you need to develop a credit score and have no other realistic option, it can be worth it. Be sure to assess what you will pay and how much you expect to improve your score, and decide whether it’s worth it.

Take a look at our list of the best credit builder loans to compare the costs of some of the most popular credit builder loans you can get online.

Factors That Influence the Cost of a Credit Builder Loan

Before you start comparing the costs, be sure to get familiar with the ins and outs of how credit builder loans work.

Loan Amount

The loan amount is the total amount of the credit builder loan that you are borrowing. It is essential to keep in mind that the larger the amount and/or the short the payment terms will increase your monthly payments.

Credit builder loans are typically small, no more than $1,000 or so. But there are several that will go up to $3,000.

Credit Strong even offers credit builder loans that go up to $10,000 for building business credit.

Monthly Payment

Your monthly payment amount will be determined by the amount of your loan, APR percentage rate, and the loan terms. The higher your loan amount and APR percentage rate is, the higher your loan payment will be. The longer your loan terms are, the lower your loan payment will be.

Example: Self Credit Builder Loan Monthly Payments

Take a look at the Self credit builder loan costs below to get a better idea of how the loan you choose determines your monthly payment amount.

* APRs often change. Check lender websites before applying.

Loan Term

The loan term is how many months you will have to pay off your credit builder loan.

Most credit builder loans come with terms of 12-months, 24-months and occasionally, you will see lenders offer 36-month terms.

APR

The annual percentage rate (APR) represents the total cost of the credit builder loan expressed in a percentage rate.

This percentage rate represents the fees associated with the loan and the interest rate all rolled up into one uniform and easy-to-use number to compare against other loan options.

The APR is a much more accurate number to use than the interest rate because it also factors in any fees you pay associated with the loan.

In some instances, a loan may have a lower interest rate than its competitors, but it may have much higher startup fees which can make the loan with the lower interest rate have the highest APR % and cost you the most amount of money.

APRs for a credit builder loan vary widely among providers. We’ve seen them be as low as 5% and some that go up to 30%. Don’t be fooled, be sure to compare the APR percentages against one another to get an accurate cost of the loan.

Administrative Fees

These are fees associated with starting the loan and administering it. They are usually very small in regards to credit builder loans, but they do affect the overall cost, so be sure to factor these fees into your decision process.

Depending on your lender, the initial fees can be from zero down to as much as the initial monthly payment.

For example, Self has a setup fee of $9, while MoneyLion Credit Builder charges a membership fee of $19.99/month.

Total Cost Of The Loan

The total cost of the loan is probably the most crucial category because this number represents your actual loan costs. With this number, you can compare multiple credit-builder loans against one another to determine how much does a credit builder loan costs?

As we mentioned at the beginning, the total cost of a credit builder loan can be as low as $12 (SeedFi Credit Builder) and can go up to $150 (Self X-Large Builder) for a loan with a 24-month term.

Example: Self Credit Builder Loans Total Costs

In the table below you can see the final cost of all four credit builder loan options offered by Self.

* APRs often change. Check lender websites before applying.

Late Fees

Keep in mind that if you pay your credit builder loan late, the lenders will charge you late fees.

First, do not pay your credit builder loan late!

The whole purpose of this loan is to positively increase your credit payment history. Paying your loan late defeats the purpose of this credit-building product.

​ If you cannot pay your loan on time, contact your lender immediately and figure out another option.

Often the lender will cancel the loan and send you the money you have paid into the savings account with less interest and a small penalty.

For example, Self will give you a 15-day grace period before charging a late fee and will not report your loan late until it is 30 days past due.

The post How Much Does a Credit Builder Loan Cost? appeared first on FinMasters.

Even though they are specifically designed to help people establish and improve credit, credit builder loans will also help you build savings.

Here’s everything you need to know about how credit builder loans work, how much they cost, and how and where to get one.

What Is a Credit Builder Loan?

A credit builder loan is a small loan that banks, credit unions, and online lenders offer specifically to help clients build credit.

These loans are not like regular loans. You don’t get the money and then pay it back. Instead, the bank puts the money in a locked account and releases it to you when the loan is fully paid.

The lender takes no risk, so they can make these loans available to almost anyone, including people with no credit score or bad credit.

In most cases, you won’t have access to your funds until you pay off the loan in full, Some providers may give you access to some of your loan funds immediately.

Upon making your final payment, you will have access to the entire loan amount, less any fees and interest charged.  

The payments are reported to the three major credit bureaus which will help your payment history and should help build your credit.

This is one of the easiest credit-building options available since there are no credit checks and pretty much anybody can get approved for a loan.

How Does a Credit Builder Loan Work?

Well, I know my English teacher used to say, ‘never answer a question with a question,’ but… Have you ever put something in ‘Layaway’ at a store?

I think the easiest way to understand how a credit builder loan works is to think about the loan as a ‘Layaway’ option.

Credit builder loans work pretty much the same way as ‘Layaway’! The lender gives you a loan but you don’t get access to the money until you make all of the payments.

Unlike layaway, credit builder loans are a great tool to build your credit and improve your payment history, if you make all your payments on time. And, instead of taking home a bunch of stuff that you probably didn’t need in the first place, you will receive your loan amount in one lump sum.

Is a Credit Builder Loan Right for Me?

A credit builder loan is a great credit-building option for people just starting on their credit journey as well as for people who drove their credit off a cliff and are now trying to climb back up.

As long as you make your payments on time, you will build a positive payment history, which accounts for 35% of your credit score.

You will also add an installment loan to your credit mix.

However, due to the nature of these loans, they will cost you. At the end of the terms, the total amount of money you have paid to the lender will be more than the amount of the loan you receive upon completing your payment terms.

Most credit builder loans will not allow you to access the funds until you have paid off the loan completely. This means that you cannot take out any amount of cash, even for emergencies, unless you cancel your account.

A credit builder loan is the best option for people with limited or no credit history who are looking to build savings and improve their credit score at the same time.
It’s not a great option if you are uncertain that you will be able to make payments on time or do without that money for the duration of your loan term.

Credit Builder Loans Pros & Cons

When deciding if a credit builder loan is right for you it’s important to weigh the pros and cons of this product against the possible impact on your credit score.

Will a Credit Builder Loan Improve My Credit Score?

Credit builder loans are a great credit-building tool that – if you make the payments on time – will have a positive effect on credit history.

Here’s the deal… If you have bad credit, no credit, or are just looking to improve credit, and you get a credit builder loan, make the payments on time, it certainly can’t hurt your score.

We know that your payment history plays a significant factor in determining your credit score, as much as 35%. So, if we can have loan payments reported for a year or two on a credit builder loan, it is going to increase your payment history.

But more importantly, is that it will add an installment loan to your credit mix. Typically people with lower credit scores do not qualify for installment loans so they are weighted a bit heavier than credit card revolving loans.

Here’s the one thing you DON’T want to do… Never make a late payment on your credit builder loan!

That would be a real knucklehead move that could lower your credit score and ultimately defeat the purpose of you getting one. 

How Much Will Your Credit Score Increase?

People with thin credit files will see the biggest score gains.

We’ve heard stories of people’s credit scores increasing over 100 points… This seems possible, especially for people with absolutely NO credit history or very little credit history.

A CFPB study found that people who’ve taken out a credit builder loan without existing debt saw their score increase by 60 points more than those of people who already had debt.

If your credit report is a mess, if you have a bunch of late payments or owe too much money, the impact of a credit builder loan on your credit score will be minimal.

How Much Does a Credit Builder Loan Cost?

Credit builder loans can cost anywhere between $12 and $150 per month, but remember, once you make your final payment you will get that money back less some minimal fees and interest.

As you can see, there are many factors that influence the final cost of a credit builder loan. We explained what these factors are in detail, and provided some examples, in our article on the cost of credit builder loans, so check it out if you want to learn more about them.

Here’s a shorter version of all the factors that affect the cost:

• Loan amount – the total amount of the credit builder loan that you are borrowing.
• Loan term – how many months you will have to pay off your credit builder loan.
• APR – this percentage rate represents the fees associated with the loan and the interest rate all rolled up into one uniform and easy-to-use number.
• Administrative fees – fees associated with starting the loan and administering it.

Be sure to assess exactly how much you will end up paying and how much you expect to improve your score, and decide whether it’s worth it.

Credit Builder Loan Cost Examples

To give you an example of costs associated with a credit builder loan, take a look at these two examples.

The first table is the pricing of Self, one of the most popular credit builder loans today. Compared to similar products, Self’s costs are somewhere in the mid-range.

Next, take a look at the cost of Credit Strong, which offers many more options, most with larger loan amounts and longer loan terms.

If you want to see what other popular credit builder loans cost, take a look at our list of the best credit builder loans where we break down the pricing of each provider and compare them head to head.

Where to Get a Credit Builder Loan?

Credit builder loans have traditionally been offered by credit unions and banks. Today, there’s a growing number of online lenders that make the process of getting a loan faster and more convenient.

1. Credit Unions

Did you know that your local credit union may offer a credit builder loan? Approximately 15% of Credit Unions provide them.

If you belong to a Credit Union that offers credit builder loans then you are in luck! They usually offer them with little to no startup costs, low APR rates, and friendly terms.

The problem is that you have to be a member of the Credit Union to qualify for their credit builder loan. Some Credit Unions allow membership based on where you live, where you work, military status, or associations you belong to.

Be sure to check with your local Credit Union to see if you qualify.

2. Local Banks

Some local banks offer credit builder loans. Just like the Credit Unions, they offer excellent terms that are hard to beat.

Unfortunately, they don’t usually advertise these loans, and you have to get lucky for your local bank to offer them.

One positive thing about the local banks is that you won’t have to qualify to be a member of the bank, unlike the Credit Unions.

3. CDFI’s

In many bigger cities, you will find CDFIs (Community Development Financial Institutions) that exist to help increase the financial fluency and power of lower-income neighborhoods.

These CDFI’s will offer CBLs to people located in their community at very low rates and excellent payment terms.

Check with your local Community Development Financial Institution to see if they have such a program.

4. Lending Circles

You often find lending circles working within local communities with the goal of credit building and credit education.

The way they work is that a group of people each pay a set amount each month into a financial institutionally regulated account. One of the people in your ‘Lending Circle’ each month is pre-selected to receive that entire month’s payment from all of the members. Each member takes their fair turn, and the financial institution organizing the circle reports your payments to the three major credit bureaus.

Some of these programs will cost you almost nothing and not charge you an interest rate.

Check with local financial institutions about a lending circle in your area.

5. Online National Lenders

Most people can quickly and easily obtain a credit builder loan online from the comfort of their couch. You can sign up for a loan in literally a couple of minutes online, and costs are very competitive.

Here are our top choices for nationally available lenders offering credit builder loans online:

1. Self – Best for building credit and savings in one plan
2. Credit Strong – Best for large loan amounts
3. MoneyLion – Best for easy access to funds
4. SeedFi – Best for payment flexibility and costs
5. Digital Federal Credit Union – Credit union membership, low rates, no fees

You can find more details on each of these credit builder loans here.

You may be able to save a few dollars by finding a Credit Union or Lending Circle in your area, but it may take you days, or even months to find those savings.

How To Get A Credit Builder Loan?

If you decided on getting a credit builder loan but are not sure where to start or what awaits you, here’s what you have to do, from start to finish.

1. Find a Credit Builder Loan Lender

Whether you look into a Credit Union, Local Bank, CDFI, or Online Lender, identifying your lender options is your first step.  

2. Decide How Much to Borrow

You don’t need to borrow a significant amount. Keep in mind the more you borrow the more you will pay in interest.

You are trying to establish a payment history, but it is also sort of like a forced savings account so if you have a big purchase in mind that you need to save up for…why not kill two birds with one stone?

3. Compare Lender Costs

You need to identify the possible lenders and then look at their costs and terms. 

Put their costs and terms side by side… How much are their APR, costs for the loan, payment terms, and are there any penalties?

4. Apply For The Loan

Once you determine which credit builder loan is best for you, go ahead and apply with confidence.  

5. Make All Payments On Time

If accepted, remember the whole point of getting a credit builder loan is to establish a good payment history with the big three credit bureaus. 

So, DO NOT make any late payments!

Let me say that one more time, NO LATE PAYMENTS!  

6. Monitor Your Credit Score

Now that you are actively pursuing a better credit score, it is time for you to start monitoring it.

I use MyFico for credit monitoring services and to check my credit score, but there is some cost, and there are plenty of ways to get your credit score for free.

7. Don’t Rush Repayment

Again, unlike any other loan program, this is the one you want to make every payment on time, but you don’t want to pay off the loan early.

Remember, you signed up for a credit builder loan to help your payment history look better on your credit score. Paying the loan off early will completely defeat this purpose.

8. Make All Payments

Once you make that final loan payment, you will have access to the entire sum that you paid the lender, less any interest and fees charged.

Things to Watch Out for When Shopping for a Credit Builder Loan

If you’re shopping for a credit-builder loan you’ll want to watch these factors.

Actual Loan Costs

There can be many fees associated with any loan and these loans are no different. You need to know how much the loan is costing you to make an informed decision on the best option for you.

Keep a close eye on the fees to start the loan, the APR, and the monthly payment terms.

Knowing these key terms will help you make a solid final decision.

Fresh Start Loans  

We have seen unsecured personal loans advertised as Credit Builder Loans. 

Fresh Start Loan is a name that is used very loosely and generally does not refer to a credit builder loan.

If the advertisement says that you will get money upfront, it is probably not a loan you will qualify for if you have no credit or bad credit.

Make sure you thoroughly investigate any Fresh Start Loan you are considering.   

Starting Over Loans

I have seen this term only a couple of times while researching credit builder loans.  

Starting Over Loans are targeted at people with bad credit and have insanely high-interest rates. 

Similar to Fresh Start Loans, the term ‘Starting Over Loans’ has no specific industry meaning and can be used for a wide range of personal type loans.

Again, just like Fresh Start Loans, make sure that you do your research before purchasing.

Pledge Loans

Sometimes people confuse Pledge Loans with credit builder loans. On the face, they can look similar, but in reality and function, they are not.

A Pledge Loan is a secured personal loan.

A borrower will pledge a CD (Certificate of Deposit) as collateral, and in return, a Credit Union (I have only ever seen Credit Unions use the term Pledge Loan) will give a loan up to the amount in the CD pledged.

This is much different than a credit builder loan because in order to get a credit builder loan you do not have to put up any collateral.

These loans help you build credit, but you have to have collateral to pledge, unlike credit builder loans where you make a small upfront payment and regular small monthly payments.

The post What Is a Credit Builder Loan and How Does It Work? appeared first on FinMasters.