Credit Builder Loans

When you are looking to improve your credit score, one of the options to consider is a credit builder loan.

With a credit builder loan, you would receive the amount you are borrowing and make the payments back on time, so they can be reported to the credit bureaus to help your profile. Over time this will help you to create a positive payment history.

A credit builder loan is often suitable for those for a thin credit profile (no history), poor credit, or newcomers looking to establish credit.

Using a credit builder loan is a good alternative option to improving a credit score that can help establish a good rating.

How Credit Builder Loans Work

When you apply for a regular loan, if approved you would receive the entire amount that you applied for. 

With a credit builder loan, you would make payments towards money in a savings or CD account that you can access later when you have completed the scheduled payments. So once you’ve paid the amount, you would get access to the funds, which is opposite to a regular loan.

Having a credit builder loan is about making positive payments, which are reported to credit bureaus, and help build your payment history. Improving your payment history is one of the most influential parts of a credit score and accounts for 35% of your entire score.

To learn more about what makes a good credit score click here.