Credit builder loans

[Anonymous]

I tried searching for info for Credit Builder loans and the information I found was a little vague or just went right over my head.  Has anybody here used such loans?  If so, would you recommend them?  From what I understand, you don't have access to the money till you have payed it off which is anywhere from 6 months to a year.  I'm completely ok with that.  However, it seems as if they don't report to the CRA monthly.  One site said that they will report at the end of the 12 month mark and another said 6 months of on time payments.  Am I understanding this correctly?

Also, how difficult is it to get approved for these?  My Exp. Fico is only 603 and unfortunately my CR is full of old collections and charge offs from loans (one from a credit union), credit cards, and medical bills.  We hit a really hard time several years ago where we had to do a short sale and basically had to throw our hands up when it came to paying our bills.  We do have some perfect car notes that were closed once we payed them off and one that is currently being payed on.  That's about it.  We don't have any open credit cards or loans right now.

We are beginning the process of starting PFDs on our accounts, so hopefully within several months our credit will improve.  I understand that it's always better to wait till your credit improves, but is it somewhat easy to get approved for a Credit builder Loan?  If possible, I would like to start that ASAP since it seems as if they don't start to report to the CRA for several months.  We would like to start house hunting at the end of the year with a VA loan and really need to get that score up.  Would hate to have a credit enquiry on my CR unless I get approved.

Thanks!

[Anonymous]

We did CashCall years ago more so because we needed the money and the APR was 90+%.  I don't remember specifically what it was, but that's not a made up guess, it was HUGE.  It was fine to pay off early but we were not able to.

If you need a line of credit now I'd stop by a CU and talk to someone there.  I think you will have a better chance of getting the loan at a CU and even a better chance with less negative TLs on your report but that can take a few months work and a hundred or so in CMRRs. 

You can try to apply for a credit rebuilding card such as Orchard but you'll probably get a small credit limit, say $100-300 (I got $300) and start there while working on PFDs/GW letters.

[RobertEG]

I am not familiar with the terms of that specific creditor, but normally consumer finance companies, when you dig into the details of the fees and interest, are at much less favorable terms than those of major banks or credit unions. For that reason, when creditors do a manual review of your CR, use of a consumer finance company at least infers problems in being able to get credit under more favorable terms.  It is usually best not to have consumer finance trade lines in your CR.

[Anonymous]

First, I apologize.  I have no idea why my phone changed paid to payed

The loans are provided  mostly by credit unions.  Would this be ok?

[Anonymous]

First off, I do not believe in credit builder loans. They are usually combined with high interest rates and misc. fees that are simply not worth the price for achieving better credit.

In my opinion, you should work on removing the collections, charge-offs, and other derogatory items on your credit report. Last month, I started with 21 negative accounts and today, I have 5 negative accounts that I am still working on. My boyfriend added me as an authorized user to his Lowe's account and I have a positive student loan payment history. EVERY DAY, I am sending out letters to improve my credit score, whether asking for PFDs or proper validation. My credit score has increased +36 points in less than six weeks.

I don't think it's wise to take out a loan while you are attempting to repair your credit. Perserverance will be cheaper than a credit builder loan and in 6 months, it's possible you can improve your credit without any extra spending.

I, too, would love to have a house by the end of the year, but I'd rather have all the negative accounts off my credit reports and get a better interest rate than go out an get a loan that I have to pay back with interest. It takes time, but you will get there

Good luck!

[izzesparks]

Well this is just my opinion and I don't know very much about rebuilding loans, but if you are correct about the terms then I would stay away from them. However I do believe in getting a small loan to add variey to your tradlines. you will gain a few points, but more importantly some lenders ( well at least the few lenders I spoke to) prefer to see some type of loan on your credit report and not just a bunch of credit cards, and thats auto and home lenders that told me that.

Where I live, I couldnt find anyone to offer a rebuilder loan, but one of my credit unions off a fresh start loan, here are the details from there site and they report every month.

Fresh Start Loans

Sometimes you just need to wipe the slate clean and start again. Our Fresh Start Loan will consolidate negative credit up to $3,000.00. Use this loan to:

• Improve your financial position
• Rebuild your credit history
• Clear annoying debts on your credit report

So I am going to apply for that next month, hopefully it works out well, I hear the payment arent that bad so I should be ablt to handle it.

I have been cleaning my report for about 2 months now. I have had several things deleted. You can clean your report and try to find something to rebuild your credit at the same time. I would like to only have 4 tradelines going, so by next month hopefully I will have 3 CC's and 1 loan, I am on my way to better credit health.

[Lasardo]

I love the idea of saving money while rebuilding my  credit AND earning interest (CD) on top of it. I found a bank that does the credit builder account if you would like the info I can PM you. 

[finnewbie]

Good morning,

Could you PM me the name of the bank?

Thanks so much.

[Lasardo]

I got a credit builder account with a 597 EX score, they reported immediately. The payment is .44 % of the amount you chose ( I went with 2K at $88.00 a month for 24 months)
This is a break down of how it works. :

< you borrow an amount between 1-5k that is saved in an interest earning account for 24-60 months depending on what time frame you chose.
> you earn interest through the CD during the course of the Loan and receive the principle and interest when the loan is repaid.
> on time consecutive payments ate reported to the CBs helping establish positive payment history.
I can pm whoever would like the information.

[Lasardo]

Finnieibie pm sent!