Best Credit Builder Loans

Credit Karma's Credit Builder account (formerly SeedFi) has many advantages because it’s free to use and flexible enough to overcome some of the downsides of traditional credit builder products. However, it will take a bit more work to actively manage. Instead of a loan, it’s actually a line of credit, which helps you build credit in different ways (it may be more useful than the typical credit builder installment loan, in fact). 

When you sign up for Credit Builder, you get two accounts: a line of credit and a savings account. 

You’ll set up recurring monthly withdrawals of $10 to $100 from your line of credit into your savings account, which you can’t access until you’ve saved $500. Then, you’ll set up automatic payments from your Credit Karma Money Spend account (which you’ll also need) to pay off the line of credit. You can pause and reset this anytime, such as if you’re going through a temporary budget crunch. You’ll need to do at least one transaction every three months to keep it active, however. 

When it comes to building credit, longer is better—and Credit Strong offers two of the longest-term credit builder loans around. Instal features loan terms from 24 to 48 months, with monthly payments of $48 to $28, respectively. CS Max loans come with five-year terms and monthly payments of $49 to $449, depending on how much cash you want to save by the end of the loan.

In addition to installment debt (i.e., loans with regular monthly payments), Credit Strong also offers Revolv, a $500 line of credit with a $99 yearly fee and 0% interest. This will add revolving credit to your credit reports, another major player that determines your credit score. You can’t use this line of credit to buy things, but you can set up recurring transfers into a savings account that unlocks after a period of time. If you set up automatic payments from your checking account, it’s a no-hassle way to save and build credit at the same time.  

Digital Federal Credit Union (or DCU for short) offers traditional-style credit builder loans. They work like this: You open the loan, DCU puts the loan funds into a locked savings account, and you make monthly payments to pay it off over time. The loan funds will earn interest in the savings account, albeit at a very small rate (0.15% as of March 31, 2023), and less than you’ll pay in loan interest. When you pay off the loan, those funds—plus savings interest—are released to you. 

As you can see, this loan isn’t intended for borrowing money for a necessary expense—it’s meant as an easy way to start building credit, and DCU even reports to four credit bureaus, instead of the normal three (Experian, Equifax, TransUnion, and Innovis). 

If you like using apps to manage your life, MoneyLion may be a good option. In addition to several other financial products like investments and banking services, MoneyLion also offers a Credit Builder Plus membership option, but it will cost you $19.99/month. This lets you apply for a small loan with no credit check—but be warned, your membership fee doesn’t cover any loan payments. Those will be separate.  

Depending on how well you manage your regular checking account (you’ll need to allow MoneyLion access to your account in order to apply for the loan), MoneyLion may split your funds up so that some money is available now, and some is unlocked later. The better you are at handling your checking account, the more you’ll get upfront. 

If you’re looking for an easy-to-understand credit builder loan with fewer gimmicky upsells, then Self might be a good option for you. It offers four credit builder loan plans to choose from, with pre-set monthly payment amounts and interest rates, ready to go. 

Once you’ve made three on-time payments and have a $100 balance built up in your savings account, you’re eligible to open up a Self credit card, which can accelerate your credit-building journey. 

While Self does show one of your credit scores, it’s not the actual credit score that lenders most commonly use (your FICO credit score)—instead, you’ll only get to see your VantageScore. This is usually pretty close to your FICO credit score, so it’s generally a good estimate, but not always.