April 7, 2020
Consumer Credit Expert
Starting from the bottom is always hard. With no upward momentum, just getting started can feel like a monumental task.
That holds especially true for your finances.
Money tends to make more money, and good credit lends itself to even better credit. All the best loan products – credit cards, mortgages and personal loans, for example – require a solid credit score just to get through the door. So what are you supposed to do when that score is in the pits?
There are a few options for someone in this position, and a credit builder loan is one of the best. Here’s what you need to know about this lesser-known debt product – and how you can use one to fix your credit.
What is a Credit Builder Loan?
Unlike traditional loans, credit builder loans don’t actually lend you money. Instead, they’re designed to help you build credit with little risk to yourself or the lender.
They can help you improve your credit score enough to get lower interest rates on mortgages, secure better terms on auto loans and qualify for the best credit cards. These loans work just as well for someone trying to build credit for the first time as they do for someone trying to repair bad credit.
Credit builder loan borrowers make monthly payments to the lender, which are then reported to all three credit bureaus: Equifax, TransUnion and Experian. Payment history makes up 35% of your credit score and is the most important factor, so just making these payments on time and in full can be enough to build your credit substantially.
How it Works
There are only a few companies currently offering credit builder loans. Most require an initiation or application fee, usually less than $10, and an interest rate fee similar to a traditional loan.
After applying and qualifying for a credit builder loan, borrowers then decide what kind of payment plan they want. Most credit builder loans offer low monthly payments, often starting at $15. The maximum monthly payment is usually between $100 and $200. The higher the monthly payment, the lower the interest rate.
Each credit builder loan has a set term length, usually between 6 to 24 months. At the end of the term, you’ll receive back the money you paid minus any interest charges or initiation fees. You’ve essentially just paid a modest fee in exchange for a substantial boost to your credit.
How Credit Strong Can Help
Credit builder lenders vary in terms of rates, monthly payments and customer satisfaction. If you’re interested in taking out a credit builder loan, consider Credit Strong, an Austin-based company. Here are the highlights:
-No minimum credit score required for approval
-No hard credit inquiry
-Reports monthly to all 3 Credit Bureaus
-12 or 24 month terms available
-Monthly payments as low as $24
Click the link below to learn more about how a Credit Strong Account can help you:
What sets Credit Strong apart is the freedom to cancel the loan at any time for no penalty. If you cancel, you’ll get back all the money you paid minus the agreed-upon fees – and also retain the progress you’ve already made on your credit score. That means if money is tight, you don’t have to worry about a credit builder loan eating up the funds you might need to pay bills or cover an emergency expense.
Credit Strong provides free access to your FICO credit score, so you can see how your credit grows over the course of your loan. The FICO score is used by most lenders, especially mortgage providers. If you’re trying to rebuild your score to qualify for a home loan, tracking your FICO score will show when you’re ready to apply.
The money you pay into a Credit Strong credit builder loan is secure. Credit Strong is backed by Austin Capital Bank, which is FDIC-insured. That means you’ll get your money back even if Credit Strong goes under.
Ready to make a plan to reach your credit goals? Schedule a free credit analysis with a Financial Renovation Solutions credit consultant today.
Consumer Credit Expert