This is one of our favorite program for affordable credit building, and if you need the point boost that an installment account brings, this should be one of the programs you open as soon as it fits into your budget and spending plan.
Self Lender is helping thousands of people begin their financial journey with a credit builder account.
Reports to all 3 credit bureaus. No hard credit pull and no credit history required
Self Lender helps you get a small loan that you save in a CD for 12 or 24 months
Savings plans start at $25/month and include credit monitoring
At the end of account term you've built credit history and your CD savings unlock
If you are familiar with a secured loan, it is similar, except with SELF you do not have to come up with the money up front, which can be difficult for many. This is more of a forced savings account, where you deposit money every month and you get it all back at the end of the year.
Who should get a credit builder loan
The people most likely to benefit from a credit builder loan are those with a low credit score, which FICO calls very poor or fair. Your FICO score is important because most lenders in the U.S. use the score as part of their lending decision process. A poor FICO score is 580 or below and a fair FICO score ranges from 580-669.
People with a starting credit score below 600 are more likely to see a positive impact from a credit builder loan over time, according to analysis of Self Financial customer data. The Self Financial study did not include people who are new to credit, or who may not yet have a credit score yet because they have no credit history, but if you have no credit history, a credit builder loan can help you establish credit history. If you already have an installment loan that reports to a credit bureau and is showing on your credit report, you might not need a credit builder loan. Other types of installment loans typically include:
Other unsecured loan (personal loan)
If you don't already have an installment loan, but you have a credit card, you may still benefit from a credit builder loan. That's because the credit scoring models place some value on your ability to manage different types of credit. A credit card is known as a revolving credit line, meaning it is open ended, whereas an installment loan has a fixed term and amount. How credit builder loans affect credit score
While you’re making loan payments, the lender should report your payment activity to each major credit bureau:
Making timely payments in full each month helps build positive payment history, which should put you well on the path a good credit score over time. Opening a credit builder loan can help you build this payment history, since part of the process involves making regular payments. Like any financial product, a credit builder loan is a tool, so how you use it matters. If you make payments on time, the lender will report positive payment history to the credit bureaus. Making your payments on time and in full is key to a good credit history. If, on the other hand, your payments are late or not for the full amount, your lender reports that to the credit bureaus, too, which could lower your credit score. Because most credit builder loans have a term of 12 months or more, you’ll have a solid history of on-time payments once your credit builder loan is completed. That improved credit history can make it easier to access other future loans (like an auto loan) or credit cards, and a better interest rate on those credit products. Where to get a credit builder loan Because a credit builder loan is designed for those with no credit, you don’t need good credit to be eligible. You can even apply if you don’t have any credit history at all. You typically just have to:
Be at least 18 years old
Be a US citizen or permanent resident
Have a Social Security number
Have a bank account, debit card or prepaid card (so you can make payments)
Live in one of the 50 US states
You can find a credit builder loan through certain community banks, local credit unions, some online banking sites, or at Self Financial, which is available online or via mobile app in all 50 states. Just remember to compare terms and shop around when looking for a loan. Why pick a credit builder loan?
Credit builder loans often have a low annual percentage rate compared to credit card APRs that are often over 20% when you have poor credit or payday loans that can have APRs in excess of 100%. The loan amounts are often small compared to a student loan or mortgage, and the loan terms are relatively brief compared to a 10-year student loan or 15- or 30-year conventional mortgage. You still have to be responsible when using a credit builder loan. If you miss a payment, the lender will have to report that to the credit bureaus, just as it would your on-time payments. If you don’t have a long credit history, one late payment can make a big impact. To avoid paying late, set up automatic payments to use funds from your bank account to pay your credit builder loan. Check to make sure the monthly payment went through, and use calendar reminders as an extra precaution. Autopay can help get you on the right track towards being a responsible borrower and establish good habits to use for your next secured loan.
There are several different loan options, but our recommendation is a $500 loan for $45 per month. SELF allows you to make monthly payments toward your loan and reports your loan payments to all 3 bureaus. They will hold your monthly payments in a CD and allow it to draw interest, and then they will give you the money at the end of the loan term.
AS AN ADDED BONUS, after 90 days they will send you a secured credit card which reports separately. So for the same $45 per month, you add two lines of credit reporting positively, and add to the diversity of your credit profile. Both of which will strengthen your score.
**One quick tip on this account is that Self will not report to the bureaus until you complete your first loan payment. The sign up is only $9, but you won’t have a payment due for 30 days. HOWEVER, the day after you complete the sign up, you can go into the Self app and pay your first loan payment early, and the account will hit your credit reports earlier. It won’t move ALL your payments forward, so your second payment will still be on the same schedule. We strongly suggest you make the first payment early to get the account reported as early as possible.
Page Consumer Services is a Nevada-based company and is one of the highest-rated credit restoration companies in the nation. They have years of experience helping consumers understand and work to improve their credit and offer a 120-day money back warranty to every customer. You can call 855-700-7243 to schedule a free credit consultation with a Page Consumer Services counselor today.