Best Credit Builder Accounts of 2024 (2024)

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Introduction

What Is a Credit Builder Account?

When you take out a credit builder loan, the creditor sets aside the money you "borrow" in a savings account. As you repay your loan, the creditor reports your payments to the three main credit bureaus. This builds a positive payment history, a key component of yourcredit score calculations. Once you reach a certain number of payments or pay the loan off, the creditor returns a portion of the money to you.

Since the creditor keeps the money until it's paid off, they're not at a massive risk of losing money. This means it can approve people with low credit scores or no credit. They also generally charge lower interest rates than traditional loans.

Because of the way these loans work, they are often marketed as savings accounts since you put money away in increments that you'll receive later. Many of these loans charge interest, so you'll get back less than you put in. If you're looking for a savings account, there are better places to look.

Why You Need a Credit Builder Account

Having a good mix of credit types is one way to improve your credit score. While you may have several credit cards, installment loans are expensive and often inaccessible for those with bad credit. To address this, some lenders offer credit builder loans, which require borrowers to pay off their loans before they get the money. These loans pose little risk to lenders, so borrowers with a bad credit score can qualify.

Best Credit Builder Options from Our Partners

Self Credit Builder Account

Learn more

On Self's website

Insider’s Rating

4.2/5

Perks

Build credit while building savings, starting at $25 a month.

Regular Annual Percentage Rate (APR)

15.72% to 15.97%

Fees

$9 administration fee

Recommended Credit

N/A

Loan Amount Range

Sample loans: $25/mo, 24 mos, $9 admin fee, 15.92% APR; $35/mo, 24 mos, $9 admin fee, 15.97% APR; $48/mo, 24 mos, $9 admin fee, 15.72% APR; $150/mo, 24 mos, $9 admin fee, 15.88% APR. See self.inc/pricing 3 Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report.

$600 to $3,600

Pros

  • Four different plans
  • Customers eligible for Visa secured credit card
  • No hard credit check
  • Available in all 50 states

Cons

  • Relatively high APRs for credit builder loan
  • $9 one-time administrative fee
  • Only 24-month payment periods available

Insider’s Take

Self's credit builder loan is one of the few credit-builder loans available in all 50 states. Self offers four payment plans between $25 and $150 per month, all of which take 24 months to complete. Self doesn't perform a hard credit inquiry, and it reports to all three credit bureaus, but that's the bare minimum for a loan designed to build credit.

Self Credit Builder Account review External link Arrow An arrow icon, indicating this redirects the user."

Product Details

  • No hard credit report pull
  • Reports to all 3 bureaus
  • Build credit AND savings
  • Join over 1 million credit builders
  • Unlock a Secured Credit Card after meeting eligibility criteria
  • 24 months loan duration

CreditStrong Instal Account

Learn more

On CreditStrong's website

Perks

Join the Credit Strong community of over 1 million people and small businesses.

Regular Annual Percentage Rate (APR)

15.51% - 15.73%

Recommended Credit

N/A

Loan Amount Range

$1,000 - $1,100

Pros

  • Three different plans
  • No credit check
  • Available in 48 states (excludes Vermont and Wisconsin)

Cons

  • Relatively high APRs for credit builder loan
  • $15 one-time administrative fee

Insider’s Take

CreditStrong's Instal loan is well-suited to anyone with limited or negative credit history who is looking to build (or rebuild) their credit profile. It's an especially good fit if you're looking for a longer loan term since you can get an Instal loan for as long as 48 months while many others top out at 24 months.

CreditStrong Instal review External link Arrow An arrow icon, indicating this redirects the user."

Product Details

  • Offers loan between 24 - 48 months
  • Three different loan options to pick from
  • Monthly payments are $28, $38, or $48 depending on plan
  • Offered in 48 states excluding Vermont and Wisconsin

Chime Credit Builder Secured Visa® Credit Card

Learn more

On Chime's website

Insider’s Rating

3/5

Perks

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. This is money you can use to pay off your charges at the end of every month. Credit score improvement based on a representative study conducted by Experian®, members who made their first purchase with Credit Builder between June 2020 and October 2020 observed an average FICO® Score 8 increase of 30 points after approximately 8 months. On-time payment history can have a positive impact on your credit score. Late payment may negatively impact your credit score.

Helps build credit with everyday purchases. Low credit or no credit, start improving your credit score by 30 points on average with regular, on-time payments using the Chime Credit Builder secured Visa® credit card.

Annual Fee

$0

Regular APR

None

Recommended Credit

No Credit History, Poor

Pros

  • No credit check required for approval
  • No annual fee
  • Build credit with responsible use

Cons

  • No welcome bonus or rewards
  • Requires a Chime checking account and deposit
  • No ability to carry a balance

Insider’s Take

If you have a problematic credit history or none at all, the card offers a way to get the functionality of a credit card without having to undergo a standard credit check. The card can help you build credit by reporting activity on your account to the major credit bureaus. However, it doesn't earn rewards and can't be converted to an unsecured card, so it may not be your best option. The secured Chime Credit Builder Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your card for its issuing bank.

Chime Credit Builder Secured Visa review External link Arrow An arrow icon, indicating this redirects the user."

Product Details

  • No credit check required for approval
  • No annual fee
  • No welcome bonus or rewards
  • Requires a Chime checking account and deposit
  • No ability to carry a balance

Complete Editorial Review of the Best Credit Builder Loans

Whether you want to add an installment loan to your credit report, or you're looking to build credit from scratch, these loans are a great option.

  • Fizz Credit Builder: Best for college students
  • Digital Federal Credit Union Credit Builder Loan: Best interest rates
  • Self Credit Builder Account: Best for availability
  • FreeKick Credit Builder: Best for teens
  • CreditStrong Instal Account: Best for loan amount

Best for College Students: Fizz Credit Builder

Better Business Bureau rating: N/A

Cost:None

The Fizz credit builder account is a debit card that reports expenses to the credit bureaus without adding a hard inquiry on your credit report. There's a lot to like about Fizz, such as SafeFreeze, which prevents you from additional spending if you didn't pay off the previous day's balance. Fizz also does not charge interest or fees on your balance. In fact, you can earn rewards by shopping at certain businesses, usually found on college campuses.

As a newer business, Fizz doesn't have a page with the Better Business Bureau. However, it has an average of 4.6 stars across 123 reviews on Trustpilot. 94% of reviewers gave the service four or five stars. Fizz has more reviews on its app, receiving an average of 4.5 stars on the Apple app store and 4.4 stars on the Google Play store.

Read our Fizz credit builder review here.

Best Interest Rates: Digital Credit Union

Better Business Bureau rating: A+

Cost: 5.00% APR

Digital Federal Credit Union (DCU) offers a good amount of flexibility with its credit builder loans, with loan amounts ranging from $500 to $3,000 over 12 to 24 months. The APR for these loans is steady at 5%, though DCU notes that it can change over time. Your money will also earn dividends in the savings account DCU puts your money in.

The biggest downside to DCU is its exclusivity. You have to be a member of Digital Credit Union to qualify for this loan, and membership is quite limited. DCU is available to a handful of organizations and communities around New England. It also partners with over 800 workplaces to give employees DCU memberships. You can find the full list of DCU membership qualifications here.

That said, you can access a DCU membership by joining one of the affiliated organizations listed on DCU's website since they aren't region-specific. Most of these organizations don't have any location requirements, just a membership fee. You hold a DCU membership for life, so even when your membership at one of the listed organizations expires, you'll still be a DCU member. Your family members will also be eligible for memberships.

While DCU has the best rates among credit builder loans, it has poor customer service ratings across the board. DCU's BBB page has an average of 1.76 stars across 77 reviews. Its Trustpilot page doesn't fare much better, receiving an average of 1.9 stars across 50 reviews. Reviews apply to DCU as a whole, not just its credit builder loan. Customers often complain about DCU's poor customer service, particularly over the phone.

Read our DCU credit builder loan review here.

Best for Availability: Self

Better Business Bureau rating: F

Cost: 15.72% to 15.97% APR

Self is one of the more established loan providers and one of the few providers that operate in all 50 states. It has four plans available, from small to extra large, that range from $25 to $150 monthly. All plans have a 24-month payment term.

One of Self's most significant benefits is its secured Visa credit card, which borrowers can qualify for after three months of on-time payments and $100 deposited. The secured credit card borrows against the money you have already deposited on your credit builder loan.

This card may not come with the lowest APR compared to other cards — it bounces around 28.24% (Variable), but it's another credit-building tool available to you as a Self customer. Remember that your credit limit on this card will not be terribly high since it's based on the money you've already deposited. You will want to be careful how you use it so you don't upset your credit utilization ratio, which will hurt your credit score and defeat the purpose of taking this loan out in the first place.

It's also worth noting that Self has very poor ratings from former customers, an average of 3.25 on its Better Business Bureau page and 1.5 on Trustpilot. Negative reviews commonly cite payout issues, fraudulent accounts, and a general lack of responsiveness from customer service. It's worth noting that some of these reviews misunderstood the purpose of credit builder loans.

The Better Business Bureau noted a pattern of complaints around Self and suspended its accreditation in the beginning of 2024. It cited several issues including a lack of adherence to advertising and and selling standards and failure to resolve marketplace disputes quickly.

Monthly PaymentPayment TermTotal SavingsAPR
$2524 months$52015.92%
$3524 months$72415.97%
$4824 months$99215.72%
$15024 months$307615.88%

Read our Self credit builder loan review here.

Best for Teens: FreeKick

Better Business Bureau rating: A+

Cost: $0 - $149 annually

FreeKick is a product from Austin Capital Bank, the same company that owns CreditStrong, another credit builder account included in this guide. FreeKick allows parents to help their children build credit when they're as young as 13 years old.

When you sign up for FreeKick, you can choose to pay $149 or place a $3,000 deposit in an FDIC-insured bank account. Both will give you access to FreeKick's full services, which include comprehensive identity protection for two adults and six children and a credit builder account for children age 13 to 25. The credit builder will add a $500 revolving account to your child's credit report.

While consumers older than 25 aren't eligible for this product, it's a great way for parents to build credit for their kids. It also offers a great alternative to adding your child as an authorized user on your credit card, especially for parents worried their children will overspend. Additionally, the identity protection features offered with FreeKick rival those offered among the best identity protection services.

Read our FreeKick credit builder account review here.

Best for Loan Amount: CreditStrong

Better Business Bureau rating: B

Cost: 15.51% - 15.73% APR

CreditStrong is almost as widespread as Self, with availability in 48 states (not available in Vermont or Wisconsin). CreditStrong offers three credit-building products: Revolv, Instal, and CS Max. Revolv is CreditStrong's subscription-based revolving line of credit and CS Max services customers looking for business credit or large personal loans.

The CreditStrong Instal Account is its credit builder option, offering three plans with varying payment amounts and terms:

ProgramMonthly PaymentPayment TermTotal SavingsAPR
Instal 28$2848 months$1,01015.61%
Instal 38$3836 months$1,10015.73%
Instal 48$4824 months$1,00015.51%

Read our CreditStrong credit builder loan review here.

Credit Builder Loans That Didn't Make the Cut

We considered quite a few loans for this list. The following products offer pretty good rates, but they're a little too niche to be called the "best credit builder loans."

MoneyLion Credit Builder Plus Loan: The MoneyLion credit builder used to be among the best credit builder loans. However, while widely available, the MoneyLion credit builder has a big downside: its $19.99 monthly membership fee. While a monthly membership grants you additional features like an investment account and credit monitoring with TransUnion, it doesn't make up for the fact that the credit builder loan just can't compare to its competitors. Read our MoneyLion credit builder loan review here.

Kikoff Credit Account: Kikoff has some great rates, which beat some of the credit builder loans we included. It's also available in 49 states, excluding Delaware. Our biggest problem with Kikoff, and the reason it didn't get picked, is that Kikoff's credit builder loan only reports its loan to two of the three major credit bureaus. You can find our Kikoff credit builder reviewhere.

Republic Bank: We considered this provider because of its multiple payment plans and decent rates. The reason it didn't make the cut is accessibility. Republic Bank's loan is only available in five states: Florida, Indiana, Kentucky, Ohio, and Tennessee.

Metro Credit Union: Metro Credit Union offers even lower rates than DCU at 4.1%. Its credit builder loan can go as high as $3,000 with payment plans as long as 24 months. Unfortunately, Metro Credit Union is even more exclusive than DCU because it doesn't have that affiliated organization workaround. MCU will also pull a hard inquiry on your credit if you apply, so it's inaccessible to people building credit from scratch.

Kovo Credit Builder: When you sign up for Kovo, you agree to make $10 monthly payments to Kovo for 24 months, all of which Kovo reports to the three main credit bureaus and Innovis, the fourth biggest credit bureau. The catch is that you don't get your money back like you would with a credit builder loan. Instead, the $240 you pay to Kovo buys you access to a library of online educational resources. It functions like a BNPL that reports to the credit bureaus. While this is a sound option for building credit, it may cost you more than the loans on this list. You can find our Kovo Credit Builder review here.

One takeaway from these honorable mentions is that many local banks provide pretty decent rates compared to the lenders offering nationwide credit builder loans. If you don't see a credit builder loan that checks off your boxes, check with your local credit unions or banks to see if they offer what you need.

Who Offers Credit Builder Loans?

You can find credit builder loans from various financial institutions. However, larger banks like Bank of America or American Express usually don't offer these loans, though they often offer secured credit cards, another credit-building product. Here are some places you may find a credit builder loan:

  • Credit unions
  • Local banks
  • Online lenders

Steps to Opening a Credit Builder Account

While most people can open a credit builder account, some providers may have specific requirements, such as a minimum age or residency status. There may also be an administrative fee. It's important to review these requirements before applying.

Maximizing the Benefits of Your Credit Builder Account

The main reason that credit builder loans are such an effective tool to build credit is that they're available to sub-prime borrowers and people who are credit invisible. It's not an incredible revelation that building credit can be a counterintuitive process since you often need credit to build credit. However, with no credit requirements, they get your foot into the credit-building door.

Once approved for this loan, you can start building your payment history, which makes up roughly 35% of your FICO score and 40% of your VantageScore. If this is the first credit account reported on your credit report, you'll likely see a sharp increase in your credit score. If you're trying to rebuild credit after damaging it in some way, you'll see more muted gains. That's because building credit from scratch is often easier than rebuilding credit.

Potential Pitfalls to Avoid

In most cases, if you make your payments as agreed and close out your credit builder loan when your payment term ends, the worst-case scenario is your credit score stays the same. However, there are a few situations where your credit score may decrease.

While providers aren't technically at risk if you miss a payment, many still report late payments to the credit bureaus. Delinquencies on your credit report can severely damage your credit for up to seven years, at which point they fall off your report. If you're not sure you can keep up with the monthly payments, it might be safer to find alternate ways to build credit, like rent reporting. You can find our guide on the best rent reporting services here.

If you already have excellent credit, you may actually hurt your credit score by taking out a credit builder loan. One factor that credit scoring models like FICO and VantageScore take into consideration is the average age of your credit accounts.

Let's say you've had one credit card for three years and another for five years. Your average age of accounts is four years. You then take out a credit builder loan with a two-year payment term, which drags down the average age of your accounts to three years. In this scenario, the additional payment history will likely outweigh the damage you do to your average age of accounts, so your credit score will increase overall. However, it may do more harm than good on a credit report with a more extensive payment history. That's why you should only be looking at these products if you need them.

Credit builder loans are an excellent tool for building credit. However, it's important to note that these should be a means to an end. Your loan provider might offer you additional perks, so you stick around, but once you've built your credit to a certain level, there are better, cheaper ways to improve your credit score.

Credit Builder Loan Frequently Asked Questions (FAQ)

What exactly is a credit builder account?

A credit builder account is created for individuals looking to build or improve their credit score. The account holder makes regular payments into an account typically held by a financial institution, which are then used as collateral for a small loan. The timely repayment of this loan is reported to credit bureaus, which helps to build a positive credit history.

Can anyone open a credit builder account?

While most people can open a credit builder account, some providers may have specific requirements, such as a minimum age or residency status. Some accounts may even have administrative fees so it's important to review these requirements before applying.

Do credit builder loans require credit checks?

None of the loans included in this guide will trigger a hard inquiry on your credit report. However, some companies will request checking account information and may base their rates on the information they see on those accounts.

How long does a credit builder loan last?

Most credit builder loans have payment periods between 12 and 48 months, though you can find some that last longer or you can cut your credit builder loan short by paying it off early. Longer payment terms are often for people applying for a business loan, not those attempting to build personal credit.

How quickly will a credit builder loan fix my credit?

If you had no credit before your credit builder loan, you will likely see an immediate boost to your credit report if you sign up for one. However, these loans don't "fix" your credit in the sense that it cannot remove negative information from your credit report. It can only add positive information on top of whatever already exists on your credit report.

Are there alternatives to a credit builder loan?

Becoming an authorized user on a friend or family member's credit card is one way to build credit. As an authorized user, you get a credit card in your name. The primary cardholder is responsible for settling your charges when you use the card. You can apply for a secured credit card or other credit cards for people with bad creditinstead if this isn't an option.

How much will a credit builder loan improve credit?

The impact of a credit builder loan will vary depending on where your credit score is before you enroll in the loan and the type of credit accounts you already have on your credit report. Self, one of the larger credit builder loan companies, claims that the average Self customer sees a 49-point rise in their credit score.

Are there any risks associated with credit builder accounts?

Potential pitfalls can be overextending your financial commitments and failing to make the scheduled payments, which if reported, could negatively impact your credit score. It's important to choose an account with payments you can afford and to be aware of any fees or interest rates associated with the account.

How does a credit builder account differ from a regular savings account?

Unlike a regular savings account, a credit builder account is structured like a loan that you repay to yourself. The focus is showing your ability to make regular, on time payments, which are reported to credit bureaus to help establish or improve your credit score.

How long does it take to see an improvement in my credit score?

The time that it takes to see an improvement will vary, but many users begin to see positive changes in their credit scores within six months to a year of consistent, on time payments.

Methodology: How We Choose the Best Credit Builder Accounts

The most important factors determining which credit builder loans were the "best" were availability, flexibility, and affordability (the -bil ity trinity, if you will). Loan providers with more state availability did better than regional providers, even if those regional loans had lower APRs. Lenders also had to report your payments to all three credit bureaus, not just one or two.

Flexibility looks at the types of plans the lender offers, including limits, monthly payments, and payment periods. It also considers the borrower's ability to pay off their loans early or cancel their account before their loan is fully paid off. All these loans let their borrowers pay their loans early without penalty. Additionally, all lenders will not penalize you for canceling your account before your total amount is settled.

The third factor is affordability, which comes down to how much money you spend to build credit. These costs can come in the form of interest paid, origination fees, or additional costs, such as membership fees and early cancellation fees.

Some of these services also have additional perks. While we folded these into our considerations, they are less important than the core product. Additionally, these services can be found elsewhere at a better price point. Some of the best credit monitoring services are even free.

Jennifer Streaks

Senior Personal Finance Reporter and Spokesperson

Jennifer is a Senior Personal Finance Reporter and Spokesperson for the Personal Finance vertical at Business Insider. She started her career covering personal finance at Black Enterprise Magazine, went on to CNBC where she covered personal finance, women and money and tech and then Forbes, where she reported on personal finance, business, tech and money matters related to the economy, investing, credit and entrepreneurship. Jennifer is also the author of Thrive!...Affordably: Your Month to Month Guide to living your Best Life without breaking the bank. The book offers advice, tips and financial management lessons geared towards helping the reader highlight strengths, identify missteps and take control of their finances. In addition, she has extensive experience as an on-air financial commentator and has been a featured expert discussing credit and savings, investing and retirement, mortgages and all things money and personal finance. She has an ability to discuss and simplify complex financial issues and make them easier to understand. Follow her on Twitter @jstreaks.

Paul Kim

Senior Associate Editor at Personal Finance Insider

Paul Kim is a senior associate editor on Business Insider's personal finance team. He edits and writes about insurance.When he's not writing, Paul loves cooking and eating. He hates cilantro.

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Best Credit Builder Accounts of 2024 (6)

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Best Credit Builder Accounts of 2024 (2024)

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