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What Are Credit Builder Loans?
A credit builder loan is a very different type of loan, only intended to help you improve your credit score. You won’t get money up front to spend as you wish. Instead, you’ll have to pay back the entire loan first, and then your funds will be available to you.
By paying back the entire loan responsibly, you’ll show that you can be a responsible borrower, and this positive activity will show up on your credit reports. This doesn’t mean that your credit will simply go from awful to excellent with this one loan, but it will improve your score (all other things being equal).
Self Lender only began in March 2016, but they already have over 6,300 members saving over $1.7 million in credit builder accounts. They claim that most people who use their credit builder loan go from a 0 to 650 credit score in 6 to 9 months, or see a 60+ point improvement in their score.
How Does Self Lender Work?
Self Lender is designed for people who are new to credit, or have bad credit and are looking to improve it. It’s free to join, and you can see how the program works in full before you actually take out a loan. You’ll be able to monitor your credit and check your credit score for free, without getting financially involved.
There is only one product currently available from Self Lender, and it has fixed terms that you’ll need to agree to. This makes it easy to understand what you’re getting into, because you can see the whole plan laid out before you begin.
If you want to take out a credit builder loan through Self Lender, here’s how the process works:
- Join Self Lender, get free credit monitoring to see where you’re at now, and learn about credit.
- Get a 12-month loan of $1,100, at an interest rate of 10.57%. The money is placed in an FDIC-insured, interest-bearing CD account. It will gain $1.10 over the course of 12 months.
- Pay $12 initially, and then $97 per month for 12 months. This means you’ll end up paying a total of $1,176 if you take the entire 12 months.
- After 12 months, you’ll receive $1,101.10 and your credit score will have improved.
And that’s all there is to it. Just be sure to make every monthly payment on time – you can set up autopay for that – and your credit will definitely improve. As long as you don’t do other things to hurt it, of course.
Getting the Most out of Self Lender
Be sure to read through the entire terms, and contact their customer service if you have any questions.
Here are some other things to know about Self Lender to help you get the most out of their credit builder loan:
- You’ll need a bank account or debit card, valid email address, residential address, phone number, social security number (SSN), and to be at least 18 years of age.
- Self Lender does not do a hard credit inquiry when you apply.
- You can pay off your loan early for no penalty, saving yourself money on interest.
- If a loan payment is 15 or more days late, a fee will be charged of 5% of that payment. If a payment is 30 or more days late, this will be reported to the credit reporting agencies. Contact Self Lender if you’re having trouble making your payments on time.
- You can refer a friend to get $10, paid by check
- You can only have 1 loan at a time through Self Lender.
- Self Lender is partnered with Austin Capital Bank, which provides the funds.
Are you ready to start building or improving your credit? Click here to check out Self Lender, sign up for their free credit monitoring service, and begin making a positive impact on your credit report.
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