topic Re: Credit builder loans in Rebuilding Your Credit

Credit builder loans

Anonymous — Sun, 12 Feb 2012 21:44:40 GMT

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!

Re: Credit builder loans

Anonymous — Sun, 12 Feb 2012 21:51:10 GMT

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.

Re: Credit builder loans

RobertEG — Sun, 12 Feb 2012 21:53:07 GMT

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.

Re: Credit builder loans

Anonymous — Sun, 12 Feb 2012 22:22:02 GMT

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?

Re: Credit builder loans

Anonymous — Sun, 12 Feb 2012 22:38:37 GMT

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!

Re: Credit builder loans

izzesparks — Sun, 12 Feb 2012 23:30:45 GMT

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.

Re: Credit builder loans

Lasardo — Thu, 02 Aug 2012 08:40:12 GMT

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.

Re: Credit builder loans

finnewbie — Thu, 02 Aug 2012 14:32:34 GMT

Good morning,

Could you PM me the name of the bank?

Thanks so much.

Re: Credit builder loans

Lasardo — Thu, 02 Aug 2012 20:04:48 GMT

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.

Re: Credit builder loans

Lasardo — Thu, 02 Aug 2012 20:10:31 GMT

Finnieibie pm sent!

Re: Credit builder loans

LikeNoOneElse84 — Fri, 03 Jan 2014 18:05:06 GMT

I would love to know what bank you went with in regards to this credit building loan

Re: Credit builder loans

0REDSOX7 — Fri, 03 Jan 2014 18:16:56 GMT

Same here - can you PM me the details?

Re: Credit builder loans

Lasardo — Fri, 03 Jan 2014 19:28:02 GMT

I, personally went through my bank which is BMO Harris bank BUT I gave found that many banks and credit unions are offering the "credit builder" accounts, just ask or look it up online.

Re: Credit builder loans

credit-hunter — Fri, 03 Jan 2014 22:28:36 GMT

Hi I have a credit builder loan from my local credit union it was a simple 2 minute AP no credit pulls 500$ for 1 year I make the payment of 43.00$ per month and after 1 yr the money unsecures and it reports to all 3 CBs extremely simple to do great for building credit along with secured cards

Re: Credit builder loans

ezdriver — Sat, 04 Jan 2014 00:28:28 GMT

I did one with Vystar Credit Union in Northeast Florida.

Re: Credit builder loans

cartwrna — Sat, 04 Jan 2014 00:34:02 GMT

I had never heard of this, but would have tried it if I didn't go a different way today. Went to my local CU and took out a secured loan (used vehicle as collateral). Didn't plan on doing it but talked to a mortgage loan officer due to we are trying to rebuild for a mortgage loan in 2015, she advised me to talk to the personal loan officers and get a secured loan to pay off my validated collection accounts that were not going to delete if paid. That's a good option if you have a vehicle or other collateral to put up. Was able to secure this loan with my horrible 475 FICO (the bank pulled same CB and their score came back identical to this site.

Re: Credit builder loans

Lasardo — Sun, 05 Jan 2014 00:22:40 GMT

I just pulled out my credit Bulder account because I needed fast cash while closing on a house. They only charged me $7 then I continue to pay on the balance which is only about $500.

The loan is listed as an installment loan rather than a credit card or department store giving me more points which was great since my car is paid off.

I think I am going to open a second one because this really gave me the credit I needed while saving... Love it.

Re: Credit builder loans

Anonymous — Sun, 05 Jan 2014 00:28:37 GMT

Got mine with a credit union. 500.00 paid automatically from a dedicated account where the money was put.

Now I got one from my current CU that released the funds to me.