credit builder loans

[cb1966]

Hello everyone!!  My husband's and I are looking to buy a new home in 15 months. We have been married 5 years. A previous bankruptcy was just taken off my credit report and my FICO 8 scores are 789 TransUnion , 800 Experian  and 801 Equifax . My FICO 10 scores are 822 TransUnion , 828 Experian  and 815 Equifax . Wow I don't think mortgage lenders use FICO 10 but I would settle for the high 700's to lower 800 score.

My husband.s scores are 696 TransUnion , 700 Experian  and 717 Equifax . He has 1 paid charge off from 3 years ago, otherwise he has no other negative dings on his report but he does not have any credit cards. loans etc... on his report but I added him as an authorized user 4 years ago on 3 of my credit cards. We would like to build his credit to make it as high as it can get before we apply for a mortgage in 15 months without him getting a credit card. I was reading about these credit builder loans and it seems like we could be interested in opening one up in his name to  build his score and we are wondering if any of you think this would work for us. I was reading that in some cases if your score is some what high, it could actually hurt your score but could not find any more information in regards to this. We think because he has no history of any loans or credit cards on his own a credit builder loan could help.

What do you all think? Thank you for your time and responses.

[ForwardLooking]

Personally, I would avoid them as they are designed to make the companies offering them rich at your expense for wanting to improve your credit.  This has been my personal experiance with them.  High fees and I felt like I was just chasing credit scores.

Does he per chance already have another fixed rate loan like a car loan, personal loan, or a student loan?  If yes, then a credit builder loan will have minimal impact.  If he doesn't have a fixed rate loan already, then you may want to look at a secured savings / passbook loan with a credit union.  They typically have low fees, do not require a credit hardpull, and are only about 2% interest.  I personally use Navy Federal Credit Union and have this type of loan with them.  Search the board for Navy Federal SSL loans for some strategies and how to best use it as a credit building tool.

[cb1966]

Hi ForwardLooking I will look into Navy Federal Credit Union for the other options you mentioned as my husband does not have any fixed rate loan. Thank you!

[Jeffster1]

+1 for the NFCU PLEDGE LOAN (SSL) 

Highly recommended. Do a search on here and you will find plenty of info.

[MeredithLepore]

Because he doesn't have any other fixed rate loan, a credit builder loan could improve his score. Going with an option from a credit union is probably your best bet.