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Home Forums Wealth Creation Leveraging Credit Should I get a credit builder loan to build my credit?

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  • Should I get a credit builder loan to build my credit?

    Posted by Jon Seed on July 23, 2021 at 6:01 pm

    There are a couple companies out there now that will help build your credit by giving you a special type of loan. It is almost the opposite of a secured loan, where your payments go towards a Certificate of Deposit, and at the end of the loan, you get the money you saved up.

    Is it worth it to get one of these?

    Tejan Ausland replied 12 months ago 2 Members · 1 Reply
  • 1 Reply
  • Tejan Ausland

    August 16, 2021 at 5:07 am

    If you have poor credit or no credit, then this is an ideal way to get started. Assuming you don’t have derogatory stuff on your report (missed payments, etc.), then you should see a huge jump in your credit score after a few month, after an initial dip.

    But if you already have credit, it won’t help you as much, but can still help you.

    For example, it will add more payment history and another account to your credit report, which will help you, but then it will also lower your average age of your accounts, and may count against your debt-to-income ratio.

    If you are applying for a mortgage or a major loan, wait until you get that loan before getting a credit builder loan. If you don’t plan on applying for a credit card or loan for 3 to 6 months, then it might be a good time to do it.