Credit Builder Loans
01.Saving While Building Credit
A credit builder loan is a unique financial product offered by credit unions and online lenders. The lender puts the loan amount (e.g., $500) into a locked savings account. You make monthly payments over 12 or 24 months.
02.The Payout
As you make monthly payments, the lender reports them to the credit bureaus as on-time loan payments. Once the loan is fully paid off, the bank releases the saved money to you, minus a small interest fee. You build credit and save money simultaneously!
03.Excellent for Credit Mix
Your credit score benefits from having different types of credit (revolving credit like credit cards, and installment credit like loans). A credit builder loan is an affordable way to add installment history.