Updated October 15, 2023

9 Best Credit Builder Loans to Improve Your Score

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Looking to boost your credit score and build thousands of dollars in savings — all with no credit check? Review this list of the 9 best credit builder loans.

Having a high credit score comes with major perks. You get lower APR on loans, cash back credit cards, and more.

But what if your credit score is bad — or doesn't exist?

Enter: the credit builder loan.

The best credit builder loans allow people with poor credit to improve their score at minimal cost. In this article, review how a credit builder loan works, the pros and cons, and your 9 best options for loans.

Plus, learn what to look for in finding the right loan for you.

What is a Credit Builder Loan?

A credit builder loan is a financial product used to help individuals with low-to-no credit boost their credit score.

Unlike a traditional loan where the borrower gets money upfront and pays it back over time, a credit builder loan requires monthly payments before distributing the money.

The lender puts your money in a secure account, like a savings account or certificate of deposit. You receive that money after the loan is paid in full.

How Does a Credit Builder Loan Work?

The bank or credit union that lends the money will report your on-time payments to the major credit bureaus (Experian, Equifax, and TransUnion).

This is a big step toward improving your credit score, because payment history is the biggest factor in calculating your score, accounting for 35% of the total score[1].

Where can I get a credit builder loan? Credit builder loans are not common. Your best bet is to check with your local credit unions and community banks, but there are also companies specifically dedicated to credit builder loans (more details below).

Best Credit Builder Loans

Credit builder loans are not offered by all banks, and many of the largest financial institutions like Bank of America, Wells Fargo, and Chase do not offer them.

However, credit builder loans are commonly offered by local credit unions or community banks, plus companies that specialize in credit building.

Here are some of the most popular credit builder loans available.

NOTE: All loan details not publicly available online have been provided by individual representatives at the respective banks, credit unions, and companies via telephone inquiry.


  • Amount: $500 to $3,000
  • Terms: 12, 18, or 24 months
  • APR: 5.00%[2]
  • Type: Secured
  • Credit Check? No
  • Fees: None

Based in Massachusetts, Digital Federal Credit Union (DCU) stands out for their low rates, no credit check, no fees, and customizable terms.

While their membership eligibility requirements make joining more difficult, there's an easy workaround.

You can get a community sponsor or donate to one of the charities associated with DCU, such as Reach Out for Schools for $10.[3]

What is a secured loan?
"Secured" means that the bank is protected, not you. A secured loan is one that requires you to pledge a valuable asset as collateral against the loan (like your home, car, or bank account) that will then become the bank's property if you default on the loan.

Why We Like It
DCU's credit builder loan gives you the chance to earn dividends. The dividends may offset the APR of your savings loan. Build better payment history with timely payments and earn from your savings.

DCU also offers other types of products. Browse the DCU website for personal loans, auto loans, and different savings accounts that match your needs.


  • Amount: $500 to $1,000
  • Terms: 12 months
  • APR: 5.99% to 29.99%[4]
  • Type: Secured
  • Credit Check? Yes — Soft Inquiry
  • Fees: $19.99 monthly membership[5]

MoneyLion is a fintech company that specializes in banking products targeted to underserved populations.

You can get a MoneyLion credit builder loan without the credit check by joining their Credit Builder Plus Membership.

Watch out for the steep price tag though, as you will be paying a $19.99 membership fee on top of your monthly installments with this option. However, it does come with extra perks.

Why We Like It
Do you need cash instantly? MoneyLion's credit builder loan features a 0% APR cash advance of up to $300. Get access to some of your funds right away (unlike most credit builder loans where you can't access your savings).

Get Instacash in case of unexpected expenses without any hard checks on your credit.


  • Amount: $511 - $3,069
  • Terms: 24 months
  • APR: 15.51% to 15.92%[6]
  • Type: Secured
  • Credit Check? Yes — Soft Inquiry
  • Fees: Variable finance charge (up to $531)

Self, another fintech company that helps people build credit, offers pre-packaged loan terms.

Your money is placed into a 24-month CD where it earns interest.

Self offers four credit builder loan payment plans. Starts at $25/month.
Sample loans: $25/mo, 24 mos, 15.92% APR; $35/mo, 24 mos, 15.69% APR; $48/mo, 24 mos, 15.51% APR; $150/mo, 24 mos, 15.82% APR. See self.inc/pricing

Why We Like It
Self comes in different plans and locks your savings in a CD. In addition to your loan package, Self also offers a secured credit card. Maximize ways to build your credit with Self.


Pay your Self credit builder loan on time for three months, save more than $100 in your credit builder, and then apply for a Self Visa Credit Card. This extra feature does not come with a hard inquiry and does not impact your credit reports.

Credit Strong

  • Amount: $500 to $25,000
  • Terms: 12 to 60 months
  • APR: 0%[7] to 15.73%[8]
  • Type: Secured
  • Credit Check? No
  • Fees: Variable admin fee between $15 and $25 (depending on the plan)

Credit Strong can help you make large jumps in your credit score using larger loans but beware of the risk. Larger payments and extended loan terms may be hard to keep up with.

However, Credit Strong also has smaller loan options that are more in line with what the other lenders on our list are offering.

Why We Like It
Credit Strong has products to help you build good credit. Meet Credit Strong's Revolv, a revolving $500 (which can increase up to $1000) credit line that costs $99 annually[9].

Revolv works best with Instal. Pay off your Instal credit builder loan with Revolv and settle your dues. What does this do? The two accounts improve your credit mix, a factor in keeping good credit profile. Credit Strong reports payments for these two accounts to credit bureaus.

Metro Credit Union (Available in Massachusetts)

  • Amount: $500 to $3,000
  • Terms: 12 or 24 months
  • APR: 4.10%[10]
  • Type: Secured
  • Credit Check? Yes — Hard Inquiry
  • Fees: None

Individuals in the Greater Boston and surrounding areas can access a slightly lower APR than DCU by using Metro Credit Union with no associated fees.

The only catch is that Metro CU performs a hard inquiry, so you'll face a temporary reduction in your credit score for 1-2 years.

Metro CU also offers a wide array of other personal loan programs, including Celebration Loans, Citizenship Loans, and Mass Save® Residential HEAT Loans to help pay for home renovations like energy-efficient heating and insulation to save money on utility bills.

Why We Like It
Metro CU offers other products, such as personal loans and credit cards.

Do you need to borrow a large amount of money AND build credit simultaneously? Prosperity Builder Loan allows you to borrow up to $10,000 when you deposit $5,000. Pay the remaining balance over 36 months.

Do you prefer a credit builder card? Metro Builder Visa Credit Card offers competitively low rates and an annual fee of $69.00 only.

SEFCU (Available in Upstate New York)

  • Amount: $500 to $3,000
  • Terms: 5 year max term (no minimum)
  • APR: 0.85%[11]
  • Type: Secured
  • Credit Check? Yes — Hard Inquiry
  • Fees: None

Headquartered in New York's state capitol, SEFCU has easily the lowest interest rate of any credit builder loan we can find, at only 0.85%.

The only catch is that you must live in the area and become a member (for a $1 fee).

There is a maximum term of 5 years, but no minimum loan term. The only stipulation is that your monthly payment cannot be under $35, according to a loan specialist at the credit union.

Even if you don't qualify for SEFCU membership, SEFCU shows how it can pay off to seek out your local credit union for the best rates (even if it may be less convenient to apply).

Why We Like It
Apart from the low-interest rates, SEFCU offers another way for you to build credit. SEFCU's credit builder credit card offers you a $500 starting credit line. It is secured with your SEFCU savings account or Share Certificate.

That's not the best thing about this option to build your credit. This credit builder card does not have an annual fee and offers $0 fraud liability protection for unauthorized transactions.

Build positive payment history in your credit reports while maintaining a blanket of safety for your transactions.

Republic Bank & Trust Company (Available in FL, KY, TN, IN, OH)

  • Amount: $500 to $1,500
  • Terms: 12, 18, 24 months
  • APR: 9.00% - 9.50%[12]
  • Type: Unsecured
  • Credit Check? Yes — Hard Inquiry
  • Fees: $10 processing fee

Republic Bank offers a great variety of terms to satisfy the needs of almost everyone.

There are monthly payment options as low as $22.97 per month, while the average APR for their nine different offerings ranges between 9% and 12%.

Why We Like It
There is a one-time $10 processing fee, but no other additional costs besides your monthly payment against the loan.

Not only that, Republic Banks offers other products as an alternative to credit builder loans. Browse their selection of personal loans (unsecured), auto loans, or credit cards, if you want to explore other ways to build credit.


  • Amount: $500, $1,000, or $2,000
  • Terms: 12 or 24 months
  • APR: 5% to 16% (depending on location)
  • Type: Unsecured
  • Credit Check? No
  • Fees: None

Cheese features simplicity and convenience. It's the credit builder loan for you if you're looking for a fast and uncomplicated way of building credit and saving money.

How? Cheese does not perform any credit check - whether it's a hard inquiry or a soft inquiry. Get started by applying for a Cheese Credit Builder in under five minutes.

Another thing to note: You can access Cheese on your smartphone. Check your Cheese account in iOS and Android. Set auto-payment methods, so you never miss a monthly savings loan. Watch your savings grow and build better credit with on-time loan payments.

Why We Like It
The best thing about Cheese is it does not have any hidden fees (goodbye admin or membership fees). You only need to pay for APR costs and your monthly savings loan to build savings and credit. Check the current APR rate for your state's interest costs.[13]

SeedFi (acquired by Credit Karma)

  • Amount: Minimum of $500
  • Terms: 50 months (for $10 per month minimum)
  • APR: N/A
  • Type: Secured
  • Credit Check? No
  • Fees: None

SeedFi works differently than most credit builder loans. When you sign up for SeedFi Credit Builder, you open three accounts: A Line of Credit, a locked Credit Builder Savings Account, and an unlocked Savings Account.

Decide how much you want to save for the month. SeedFi draws your savings amount from your Line of Credit, then adds it to your locked Credit Builder Savings Account. Every month, you need to pay the amount due in your Line of Credit.

Access your savings in the unlocked Savings Account once you reach $500 in savings and have paid off the loan from your Line of Credit.

Why We Like It
SeedFi doesn't have any fixed term. Draw from your Line of Credit whenever you want to put some savings in your locked Savings Account. Just make sure to pay your savings loan on time to build better credit history.

Is a Credit Builder Loan a Hard Inquiry?

It depends on the loan provider. Many lenders offer a credit builder loan with no credit check, while others only do a "soft pull" (which doesn't affect your credit score).

But yes, some providers will perform a hard inquiry when you apply for your loan. Be sure to ask your lender upfront about their credit check process before you apply for a loan.

Important Note: If you're building credit to improve your long-term financial possibilities, try not to focus too much on the effect of a single hard inquiry. The long-term benefits of a healthy payment history will eventually outweigh the ding of a hard inquiry.

How to Get a Credit Builder Loan

Each lender has specific steps and requirements for loan applications. In general, here's how it works:

  1. Check your credit score. If your score is below 600, it's better to find a lender with no minimum credit requirement.

  2. Establish a monthly budget. Pick an amount you can commit to paying for the next 1-5 years.

  3. Search for a lender. Make sure the lender reports to Equifax, Experian, and TransUnion.

  4. Pick a loan. Lenders will have different loan terms and amounts you can choose from. Many credit builder loans start at $500 with a 12-month term.

  5. Gather your documents, such as:
    • Proof of income (pay stubs or tax returns)
    • Proof of identity (Social Security number and government-issued photo ID)
    • A valid bank account number and routing number
    • Contact information (mailing address, email address, and phone number)

  6. Apply for the loan. Look for options to apply online, or locate the nearest physical location of your lender for your application.

A credit builder savings loan is a commitment. You are locking in money every month that you will only get after your term. A missed loan payment earns you negative marks on your credit. Ensure that you can manage the credit builder loan you apply for.

The Pros and Cons of Credit Builder Loans

Let's examine the risks and benefits associated with credit builder loans.


  • Helps build credit by establishing a solid track record of on-time payments
  • Creates healthy savings habits to teach you how to set aside money each month
  • Starts your emergency fund in the form of a savings account or CD at the end of the loan term


  • High interest rates — many credit builder loans charge rates on par with high-interest credit cards
  • May harm your credit if you make late payments on the loan
  • Not effective for individuals with existing debt (details below)

According to Experian, you'll need to have an open and active account If you're just starting out and it takes about three to six months to generate your first credit score.[14]

What to Look for in a Credit Builder Loan

If you think a credit builder loan is right for you, consider these factors while performing your search.

Low Cost
The first criteria you want to consider, of course, is the cost. This comes in two forms: interest rates and fees. While interest rates may seem abstract, the total cost over the life of the loan can add up to hundreds of dollars.

For example, if you take out a $3,000 loan with a 24-month term at 15% APR, you will pay $491.04 in interest alone. That money now belongs to the bank, not you. If you borrow the same loan with a 5% APR, you end up paying only $158.74 in interest — a savings of $332.30.

Appropriate Loan Amount & Term
The last thing you want to do is to take out a credit builder loan that makes it difficult to meet your monthly financial obligations.

Figure out what you can save each month and select a loan amount with monthly installments you can afford. Calculate this based on your current income — don't plan to make more money in the future to cover the cost of the loan.

Remember, failing to make credit builder loan payments on time will reduce your credit score even further.

Convenient Location
You will receive your funds in the form of a savings account at the end of the loan term, so you want to select a financial institution that you can easily access. This may be a local credit union or a digital bank with an ATM network in your area.

According to a 2020 study on credit builder loans by the Consumer Finance Protection Bureau, these loans are only effective for individuals with no existing debt.

The study showed that participants without existing debt experienced score increase 60 points higher than participants with existing debt (who saw an average 3-point reduction in their credit score).

Bear in mind that 39% of participants had at least one late payment reported, which likely explains the credit score reduction for the participants with existing debt.

Credit Builder Loan Alternatives

Sometimes, credit builder loans aren't always the most ideal way to build credit. Here are some other ways you can build you credit:

  • Open a credit builder app and keep your monthly payments on time to gradually improve payment history.
  • Sign up for a secured credit card if you have spare cash for a security deposit.
  • Apply for loans that you're sure you can pay off (like auto loans). Always pay on time to build a positive payment history.
  • Maximize Experian Boost by signing up and adding your bills, utilities, and rent.

The Bottom Line

Credit builder loans are not for everyone. If you have existing debt or would struggle to make monthly payments, this product may not be for you. However, if you have no existing debt and can afford the monthly payment, a credit builder loan can help you elevate your credit score.

A better credit score can grant you access to better financing options, cheaper loans, more rewarding credit cards, and opens the door to homeownership — the gateway to true wealth.

For more information, check out how to build your credit score for the first time.


  1. ^ "What goes into my FICO®scores?": FICO® Score, 2023.
  2. ^ DCU. Credit Builder Loans, Retrieved 10/5/2023
  3. ^ DCU. Membership Application
    , Retrieved 10/05/23
  4. ^ MoneyLion. What is the APR on a Credit Builder Plus loan?, Retrieved 10/5/2023
  5. ^ MoneyLion. How much are Credit Builder Plus membership fees and when will I be charged?, Retrieved 10/5/2023
  6. ^ Self. Pricing, Retrieved 04/30/2024
  7. ^ Credit Strong. Revolv., Retrieved 10/5/2023
  8. ^ Credit Strong. Instal, Retrieved 10/5/2023
  9. ^ Credit Strong. Revolv, Retrieved 10/05/23
  10. ^ Metro Credit Union. Personal Loans & Home Equity Rates, Retrieved 10/5/2023
  11. ^ SEFCU. Fresh Start share-secured loan, Retrieved 10/5/2023
  12. ^ Republic Bank. Credit Builder Terms, Retrieved 10/5/2023
  13. ^ Cheese. Local APR Rate (as of October 2023), Retrieved 10/05/2023
  14. ^ Experian. A Beginner's Guide to Building Credit, Retrieved 10/5/2023

Write to Justin Barnard at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

Credit Builder Accounts & Certificates of Deposit made/held by Lead Bank, Sunrise Banks, N.A., SouthState Bank, N.A., First Century Bank, N.A., each Member FDIC. Subject to credit approval. Self Secured Visa® Credit Card issued by Lead Bank or SouthState Bank, N.A., each Member FDIC. See self.inc for details.

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