Build credit with a credit-builder loan
A credit builder loan is a small loan with a large range of interest rates
If you have poor credit, a thin credit file or no credit history, you might need a credit builder loan. What is a credit builder loan? Credit builder loans are small loans, typically made by credit unions and small banks, which are offered to clients who need to establish or boost their credit file.
There are two primary types of credit builder loans, and each type offers unique financial benefits.
As an example, an unsecured (meaning no loan collateral is required) credit builder loan offers a lump sum upfront that can be used toward an emergency expense — medical emergency, a car repair, new appliance or any other unexpected expense.
The second type of credit builder loan actually ‘freezes’ the loan proceeds until the total amount has been paid off, thus forcing you to save your money.