It is important to have good credit, and almost everyone looks for ways to improve their score, but what are the best methods and how to deploy them. The primary way to build credit is to repeatedly make payments in full and on time to raise your credit score along with growing your credit profile.
You can use several methods to improve your credit score, including a credit builder program, which is designed to help people with little to no credit history build credit. Overall, this kind of program can help build approval for credit cards, access loans and get you better interest rates.
What Is a Credit Builder Program?
One of the advantages of a credit builder loan is it neither requires previous credit nor checks to see if you have income to make payments. This kind of loan gives everyone the opportunity to start building their credit score.
Improving your credit score can be beneficial, regardless of the situation you are in. A credit builder program will help you access a small amount of cash and slowly pay it back over time, earning positive reports to the credit bureaus and making a start toward a strong credit reputation.
These loans, which are not always advertised, are offered by smaller financial institutions. In most scenarios, the amount borrowed is held in an account that you make payments to over time, meaning you don’t actually access the cash until it has been fully repaid. Benefits for the individual include building savings and improving credit, while the lender gains safety in repayment.
The Benefits of a Credit Builder Program
A credit builder program offers benefits like these:
- Improve your credit score: Formally making payments to a financial institution that reports to the major credit bureaus raises your credit score.
- Gain help if you have little or no credit: Many individuals, especially younger people, have little or no credit history, and it is vital to build this financial component for your future. These programs are essential starting points to gain strength and recognition.
- Build savings and access needed cash: As you cannot access the money until it's fully paid, you build savings that can be used in the future.
- Schedule routine payments: Things you do repeatedly get easier over time. By consistently making regular payments, you’ll get used to that habit. An essential characteristic for repaying loans is meeting deadlines, and with less pressure from credit builder programs, it is a great way to implement that experience.
- Avoid major banks: Banks tend to have more stringent loan criteria. Since credit builder programs have no requirement that you already have good credit, you can apply with success. A credit builder loan is designed more for the consumers’ needs than to benefit the bank.
Who Should Try a Credit Builder Program?
Anyone can apply for a credit builder loan program, but it may be more beneficial to some groups of people. For example, reports suggest people with existing debt may not benefit as much as new people, as participants without existing debt saw their credit scores increase 60 points more than participants with debt. So who should try a credit builder program?
- Young people: A credit builder program is perfect for young people and students. It gives a base point for people starting out and fits young people's needs to help build savings. The program provides a foundation for a good credit score.
- People who want to build a cash sum: If you want to develop a small pot of cash, a credit builder loan is perfect for obtaining that money with relatively low interest. However, it can take time, and the amount may not be large enough, so it is essential to research first. Regardless, it can be a great way to build savings.
- Anyone who wants to avoid credit cards: Some people may opt for a credit builder program to hold cash in an account to avoid using credit cards. Credit cards can encourage spending and discourage self-control. In addition, the interest can be expensive. Avoiding credit cards can be beneficial to help build savings.
- An individual with unexpected expenses: At the end of the program, you get your money back and possess a better credit score. The cash can be used to pay off any expenses you may have.
- Prizes & Features
About MoneyLion
MoneyLion, founded in 2013, operates as an online banking system designed as a financial toolkit for everyday life. You can set up financial accounts based on your needs. It offers low to no fees and very few barriers to entry. MoneyLion can be used for banking, borrowing and investing, and, with no credit checks for loans, they accept almost everyone.
The company offers a variety of products such as RoarMoney, investment accounts, Instacash Advance, MoneyLion Crypto and its Credit Builder Plus program, which helps to establish or rebuild your credit history without any hard credit check. A standout attribute of MoneyLion, and one not freely available on other programs, is that you can access a portion of the loan right away if you need cash. Using MoneyLion’s program improves your credit score as you meet payment deadlines.
The company’s website is easy to navigate and helps you track your credit progress. In addition, you can also earn rewards when using the firm's app. According to the MoneyLion website, over half its members raised their credit score by 42+ points in 60 days. You can also access features such as mobile banking, cashback rewards, financial tracking and buy now pay later options when signing up to MoneyLion.
If you need help, its website provides plenty of support with an education page that gives users further details about its products.
Build Your Credit Score
A credit builder program can be essential to individuals with little or no credit history and can benefit those with adverse credit. It is a great starting point and comes with many additional advantages, such as building savings while avoiding traditional bank loans.
MoneyLion is a great example of a credit builder program with the added benefit of quick access to cash if it is needed.
Anyone who wants to increase their credit score can apply for one.
Frequently Asked Questions
What builds credit the fastest?
Although no single action builds credit, different methods help build your credit score over time. Paying what you owe on time is one of the strongest determinants of good credit. Programs such as credit builder loans are a way to start building credit that work relatively quickly if deadlines are met.
Is a credit builder account good?
A credit builder account can be valuable for many reasons. First, the money you intend to borrow is set aside for you securely until it is all paid off, which helps you save money. Second, you can build credit and encourage self-control, creating the habit of putting money away to then have access to a larger sum at a later date.
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