Credit Builder Accounts Overview 2023

Tuesday, February 14th, 2023
Updated: February 14th, 2023
The content is accurate at the time of publication and is subject to change.

If you are facing an issue with bad credit or no credit, you know how difficult it can be to improve your credit score. But fortunately, there are financial products that can help you build or rebuild your credit.

Credit builder loans are designed specifically for people who need to build credit because they don’t yet have a strong credit history or because they have had problems with their credit in the past.

When you take a credit builder loan, you don’t get the funds upfront. Instead, the lender opens a savings account and deposits the loan proceeds that you can’t access until the end of the term. This serves as a collateral in the event you default on the loan. Typically, credit unions and lenders offer loans for small amounts from $300 to $1,000 or so. But there are some that can go as high as $3,000.

To be eligible to open a credit builder account, you will need to be at least 18 years old, and either a US citizen or valid permanent US resident with a physical address in the US. You’ll also need to have a bank account, debit card or prepaid card, a valid email address and phone number, your Social Security number or ITIN, so that the issuer can verify your identity as well as to make payments on your account.

Each month, you have to make equal monthly payments for the loan term, and this payment activity is reported to the major credit bureaus. These on-time payments can help you build a positive payment history and improve your credit score.

Once you pay off the loan, the savings account is unlocked, and you’ll receive the funds plus any accrued interest you have earned. As a result, you can build your savings while you build your credit.

The amount of interest and fees you pay on the loan varies by lender. Therefore, when choosing a lender, be sure to read all terms regarding interest rates, applicable fees, and lender policies about changing loan payments and returning the interest.

If you think a credit builder loan may be a good fit for your needs, see the overview of offers available from our partners.

Self – Credit Builder Account

Self is a technology company offering their Credit Builder Account to those who either have no credit or don’t have access to traditional financial products.

If approved for the loan, the loan amount of up to $1,000 is set aside in a secured savings account or certificate of deposit while you pay off the loan. Typically, you can expect the loan term to be 6 to 24 months.

You begin making your monthly payments, and the lender reports your payments to the three major credit bureaus. Having your payments reported helps build your credit as long as you pay on time because payment history accounts for 35% of your FICO score.

Account holders who’ve made at least three payments on time and have savings progress of $100 or more might be eligible for a secured credit card from Self. If you meet the qualification criteria for the Self Visa Credit Card, you can use it anywhere Visa is accepted. Moreover, Self may also convert your card to a partially unsecured credit card after six months.

Chime Secured Credit Builder Visa® Credit Card

The Chime Credit Builder card is a secured credit card that makes building your credit simple and without the need to incur debt. It’s especially useful for people with little or no credit history since you aren’t required to pass a credit check to qualify.

Unlike many other secured credit cards, there is no security deposit if you’ve received a qualifying direct deposit of $200 or more to your Checking Account within the last 365 days.

If you don’t have one, you need to transfer funds into that account, either through automatic transfers or manually when you open a Chime Credit Builder account. Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card.

Chime will report your activities to Transunion®, Experian®, and Equifax®. So, on-time payment history can have a positive impact on your credit score.

The Chime Credit Builder card has no annual fee and charges no interest. The only requirement is that you have a Chime Spending Account that in turn has no monthly or account maintenance fees.

Credit Strong

Credit Strong is a credit-building app that offers three loan products with a variety of monthly payments designed to help people improve their credit scores.

Although there is no option to get loan funds upfront, you will get your savings back at the end of the loan term. You will pay interest on the loan in addition to an administrative fee, but there is no hard credit check or early termination fee.

Kikoff Credit Builder

Kikoff is a bit different from a traditional line of credit or loan because you never get credit tied up to your bank account. Instead, you get a $750 line of credit that you can use to make purchases at a Kikoff store and then pay it off. In some way, it’s like a payment method you might choose when ordering from another online store. What’s more, any purchase can be split up into a series of monthly payments.

You are responsible for paying back any purchases financed by the Kikoff Credit Account, but there are no additional interest fees, late fees, or other fees.

Kovo – Credit Builder Account

Kovo Credit is a credit platform that helps people improve their credit score by making purchases through the platform, which are then reported to both Experian and Equifax. In addition to loan offers, the credit building platform also provides online courses on personal finance and money management.

Account holders can receive a $240 installment loan without fees or interest charges associated with using the platform. There is no credit check required for approval, meaning that anyone can sign up and start building their credit, regardless of their current credit history. Additionally, approval is instant, making it easy for users to access the platform and start improving their financial health.

Investing in your own development can be a wise move, and Kovo makes it easy and affordable with its selection of valuable online courses.

Building credit takes time, patience and, most importantly, the wisdom to do it right. If you’re not able to qualify for traditional credit products because you have no credit history, consider a credit builder loan, which was created for this purpose. Having a history of responsible repayment behavior can positively impact your credit score and make it easier for you to access loans or other financial services in the future.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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