A credit builder loan is a type of loan designed to help people build or improve their credit score.
It's typically offered by credit unions and community banks.
You sign up for the credit builder loan and the lender will put the money in a savings account you do not have access to until you pay off the loan.
The lender then reports these payments to the credit bureaus.
Credit Builder Loan Warning
Even though you do not receive the money until the loan is paid off you must make your payments on time.
If you do not make the credit builder loan on time the late payments will negatively affect your credit.
If you cannot make a payment within the proper time contact the lender and either have them cancel the loan or give you more time.
To get a credit builder loan, you'll need to find a lender that offers this type of loan.
The lender will typically require you to fill out an application and provide some basic personal and financial information, such as your name, address, income, and employment status.
From my research Self or one of your local Credit Unions is a very good place to get a Credit builder loan.
Once you're approved for a credit builder loan, the lender will disburse the funds to a savings account (you will not be able to access the money until the loan is paid off), and you'll start making payments on the loan according to the terms of the agreement.
It's very important to make all your payments on time and in full, as missed or late payments can have a negative impact on your credit score.
As you are making on time payments on your credit builder loan the bank or credit union will report your on time payments which will help improve your credit score.