Credit Builder Loans
Build or rebuild your credit history with a loan designed specifically to help improve your credit score.
What is a Credit Builder Loan?
A credit builder loan is a financial product specifically designed to help people establish or improve their credit history. Unlike traditional loans, you don't receive the money upfront.
Instead, the lender deposits the loan amount into a secured savings account. You make fixed monthly payments over a set term (typically 6-24 months), and once you've paid off the loan, you receive the money plus any interest earned (minus fees).
The lender reports your payment history to the major credit bureaus, helping you build a positive credit history as you make on-time payments.
Benefits of Credit Builder Loans
- Establish or rebuild credit history
- Build positive payment history
- No credit check required for most programs
- Forced savings - receive money back at the end
- Lower risk than credit cards for building credit
- Fixed payment amounts and terms
How Credit Builder Loans Work
Apply for a credit builder loan with our partner financial institutions. Most don't require a credit check.
The lender deposits the loan amount into a secured savings account that you can't access until the loan is paid off.
Make fixed monthly payments over the loan term (typically 6-24 months). Each payment is reported to credit bureaus.
Once you've paid off the loan, you receive the money plus any interest earned (minus fees).
How Credit Builder Loans Impact Your Credit
Credit builder loans can positively impact your credit score in several ways:
- Payment History (35% of score): On-time payments are reported to credit bureaus, building positive payment history.
- Credit Mix (10% of score): Adding an installment loan to your credit mix can improve your score if you primarily have credit cards.
- New Credit (10% of score): A new credit account can temporarily lower your score but will benefit you in the long run.
Most people see a noticeable improvement in their credit score within 6 months of consistent, on-time payments.
Eligibility Requirements
What You Need
- Be at least 18 years old
- Have a valid Social Security Number or ITIN
- Have a checking account for payments
- Proof of identity (government-issued ID)
- Proof of income (for some lenders)
Good Candidates For Credit Builder Loans
- People with no credit history
- Individuals rebuilding after credit problems
- Recent graduates or young adults
- People who want to improve their credit score
- Those who want to build savings while building credit
Frequently Asked Questions
Credit builder loans typically range from $300 to $3,000. The amount depends on the lender and your ability to make monthly payments. We recommend starting with a smaller amount if this is your first credit builder loan.
Most people begin to see improvements in their credit score after 3-6 months of on-time payments. However, the full impact may take 12-24 months, depending on your credit history and other factors affecting your credit score.
Yes, most credit builder loans have an application fee and/or administrative fee. Some may also charge interest on the loan. These fees vary by lender, but they're typically modest compared to the benefits of building credit. We'll explain all fees before you commit to a loan.
Missing payments can negatively impact your credit score and may result in late fees. If you're having trouble making payments, contact your lender immediately. Many lenders offer hardship programs or can work with you to adjust your payment schedule.
Yes, most lenders allow early payoff. However, since the purpose of a credit builder loan is to establish a pattern of on-time payments over time, paying off too early may limit the positive impact on your credit score. We recommend making payments for at least 6 months.
Both can be effective tools for building credit. Credit builder loans are better for people who want structure and forced savings. Secured credit cards offer more flexibility but require more discipline. Many people use both simultaneously to build credit faster and improve their credit mix.