Best Credit Builder Loans for Fresh Graduates

Strong credit can help you buy a car or get a decent mortgage rate later when you graduate. If you are looking to increase your score as a fresh graduate, you might consider a “credit builder” loan. Here is a quick summary of what they are and how they can help you improve your credit, by getting one of the best credit builder loans.

Your credit score is determined by a combination of factors, including what type of credit accounts you have open and how much credit you have available. The best private student loans can help you improve your score by offering a line of credit that is reported to each of the three offices. They are generally offered by credit unions.

You are approved for a certain amount, generally, not more than $1,000, reports credit expert John Ulzheimer. But the loan amount is not given. Instead, the credit union places it in a savings account that earns interest. Then you make monthly payments. When the loan is repaid, you get the money in the account, Ulzheimer explains. It is like paying for money before borrowing it. After all, the idea is not to access money. It is to improve your score.

Like Ulzheimer, credit expert Alex Gerard recommends these types of loans to build credit. He tells that combined with a credit card, these loans can help you establish and increase your score in one year. But keep in mind that most credit unions charge interest on their monthly fees, so you’ll end up paying off the loan, as reported by the New York Times. Basically, you’re paying to increase your score, but the Times adds that some nonprofits offer 0% interest loans. If you opt for a credit generator loan, make sure you know what the rate is.

Best Credit Builder Loan To Consider In 2020

Many banks and other financial institutions provide customers with credit builder loans. The most prominent bodies are credit unions, web-based lenders, and banks. These entities offer loans stapled with different interest rates, principal loan amounts, processing fees, and repayment terms.

For anyone looking to secure a credit builder loan, the most resourceful suggestion would be to evaluate your options and find an affordable choice. It must also be a lender that reports to credit reporting agencies (such as those who provide student loan forgiveness for nurses) and has nominal interest rates, such as the best student loans.

Here are your options:

Best Credit Builder Loans From Banks

1.  Republic Bank

This bank holds a C- BBB rating and according to experts, their credit builder program can likely improve your credit score in as little as a year. Funds you borrow will be kept in a Certificate of Deposit (CD), where it will earn interest during the repayment tenure.

  • Amount: $500 to $1,500
  • Term period: 12, 18, or 24 months
  • Lowest APR: 6.37%
  • Fees: $10 (processing fee)

2.  Heartland Bank

This particular bank has an A+ rating from BBB and credit builder loan comes in their Small Dollar Loan Program. It allows you to repair or build your personal credit. The amount of money is directly transferred into a Heartland Bank Simply Savings Account where the sitting funds ear interest on repayment.

  • Loan Amount: $500 – $1,500
  • Term Length: 12 months
  • Lowest APR: 14.65%
  • Fees: $25 (document fee)

3.  Self

It was previously known as Self Lender and has received an A- BBB rating. Self’s website is quite interactive and user-friendly, which helps you understand their credit builder loan program in complete detail. You can also see how differently monthly terms change the cost of your loan. Loans here are FDIC insured, and you can benefit from the option of closing your or paying off early.

  • Loan Amount: $600 – $1,800
  • Term Length: 12 – 24 months
  • Lowest APR: 15.92%
  • Fees: $9 (administrative fee)

Best Credit Union Credit Builder Loans

1.  Metro Credit Union

This credit union also has an A+ BBB rating and is the highest-rated credit builder loan by us. Funds are directly deposited into a Metro Savings account where the money will earn divided during the repayment term.

  • Loan Amount: $500 – $3,000
  • Term Length: Up to 24 months
  • Lowest APR: 4.10%
  • Fees: None

2.  Digital Federal Credit Union

This financial institution won an ABBB rating. Customers can earn dividends via a DCU Savings account during the repayment of loans. The credit builder loan has a rating of 3/5 on their website.

  • Loan Amount: $500 – $3,000
  • Term Length: 12 – 24 months
  • Lowest APR: 5.00%
  • Fees: None

Related Posts

A Full FAFSA Loans Guide for 2020

Education Department of the U.S. is open for Free Applications of Federal Student Aid (FAFSA) 2020-21, from 1st October’ 19. Its submission is obligat...