The Credit Builder Loan Options Currently Available From Chase

Credit Builder Loan Chase

Does Chase Have a Credit Builder Loan?

We looked for credit builder loan options currently being offered by Chase; however, this lender does not offer these types of loan products that consumers use to build credit at this time.

TL;DR – If you’re looking for a credit builder loan, we recommend the excellent credit builder loans offered by Credit Strong and Self Financial. Both issuers provide installment loans for beginning credit history and building credit by making monthly payments that are reported to the credit bureaus which can boost FICO scores.

Credit builder accounts require no credit check and may help consumers with bad credit scores that are often unable to qualify for unsecured credit cards, personal loans, or other credit lines from lenders such as banks, credit unions, and financial institutions.

What Chase Products Build Credit?

Chase offers secured loans, business credit cards, and unsecured credit cards like the Chase Freedom Unlimited and Chase Ultimate Reward cards.

Keep in mind that any of these loans or credit cards, properly managed, will help build your credit.

These cards have low annual percentage rates and balance transfer and cashback options. However, the kicker is that only those with good credit scores will qualify!

Chase is considered a traditional bank lender and credit card issuer that offers customers great options including savings accounts, Liquid prepaid cards, debit cards, and ATM cash cards.

While Chase has many unsecured credit cards featuring identity theft protection with low annual fees and interest rates, they offer no secured credit cards for consumers without 670 credit scores with one possible exception—the Chase Freedom card for college students.  

Students that qualify and become Chase Freedom card holders may be eligible for a credit limit increase after making five monthly payments on time and become eligible for a variety of rewards and benefits.

What all this means is that if you’re trying to start building your credit for the first time or rebuilding your credit after some mistakes, Chase doesn’t have financial products to help you.

Fortunately, we have identified some viable issuers of solutions for consumers struggling with credit reports showing a late payment history or other adverse entries that are seeking to take action toward rebuilding credit.

Our Recommendations for Credit Builder Loans

It is important to understand that these credit builder loans will not help you finance an upfront purchase. Instead, the loan funds are secured in a bank-held savings account or Certificate of Deposit (CD) account until the lender has been repaid.

Credit Strong

Credit Strong is a subsidiary of an FDIC-insured community bank based in Texas that operates as a lender for consumers seeking to build credit. They directly report to Experian, Equifax, and Transunion, the three credit reporting bureaus.

Credit Strong offers three primary categories of credit building loans that include Subscribe, Build and Save, and Magnum. Each category has particular benefits that appeal to those with varying budgets and specific goals.

The loan funds in Credit Strong accounts are secured in a savings account and offer tremendous flexibility for those building credit. An example of this is having loan amounts up to $10,000 and lengthy loan terms capable of developing up to 10-year payment history.

Pricing starts at only $15 per month, and plans can be cancelled at any time with no hassle or cancellation fees.

Borrowers make fixed monthly payments that can be made using autopay. It also easily monitors their credit report and most recent credit score update using an online loan account dashboard.

Try Credit Strong

 

Self

Based in Austin, Texas, Self Financial, Inc. offers credit builder loans very similar to those of Credit Strong.

Self’s Credit Builder Account, which is an installment loan, is an excellent tool.

Self now partners with several FDIC-insured lenders that hold the loan funds in a CD. They offer four different plans with loan terms that will establish a payment history of either 12 or 24 months and have credit limits up to $1,800.

Consumers seeking good credit with limited budgets often choose Self’s Small Builder plan with a $600 credit limit that establishes a 24-month credit history by making affordable monthly payments of only $25.

Self regularly reports all loan activity to Experian, Equifax, and Transunion.

Try Self

Credit-Builder Loans vs. Secured Credit Cards

Credit cards are a quick way for boosting your credit score, but lenders typically will deny applicants that apply for traditional unsecured credit cards when they have bad credit. Like credit builder loans, secured credit cards are an alternative for building credit.

A secured credit card requires the applicant to make an initial cash security deposit when establishing an account, which is typically equal to the credit limit. Experian describes the refundable security deposit as collateral that limits the risk for the card issuer.

Security deposits require a minimum of $200 or $300. The potential refundability of the deposit incentivizes consumers to use the card responsibly by making timely payments to avoid forfeiting the amount to the lender. Many secured cards don’t have an annual fee.

Secured credit card activity is typically reported to the major credit bureaus and has been shown to effectively boost credit scores. Most of the secured credit card lenders allow those who demonstrate responsible card usage to upgrade to an unsecured credit card at some point.

Some of the advantages of a secured credit card compared to a credit-builder loan include:

  • No long-term commitment to monthly payments i.e., 12 months, 24 months, or longer.
  • Although some secured cards have annual fees, they may also accrue cashback rewards, retailer discounts, and travel protections.
  • Secured cards may be an excellent supplement to a credit-builder loan by improving your credit mix (types of credit), which has roughly a 10% impact on your overall credit score.
  • Provides convenience for paying bills online, particularly for those who are currently unable to obtain a checking account.

Alternative Ways to Build Credit

We have identified several other options that may help those with bad credit in boosting their credit score.

Open a Secured Credit Card

Most lenders that provide credit cards offer secured card options. One example is the Self Visa Credit Card, which is offered to those with an active Credit Builder Account in good standing with Self. It also eliminates the security deposit requirement that applies to secured cards.

The secured card from Self may be used at all locations where Visa is accepted and has a minimum limit of $100 that may be increased.

The application process will not generate a hard inquiry or “hard credit pull” that is visible to other prospective lenders that review your credit report.

Because secured credit cards ordinarily require a security deposit that is close to or equal to the account’s credit limit, some people confuse them with prepaid cards. While prepaid cards appear and function similarly to secured credit cards, they have no impact on your credit.

Prepaid cards are simply preloaded with cash, which establishes the maximum account that may be spent. Unlike a secured credit card, the lenders and consumers are not entering a credit-based agreement, and activity is not reported to credit bureaus.

Those using any type of credit card should understand the importance of their credit utilization ratio. Although you must use your secured card to develop a payment history, stay well below the available credit limit and avoid “maxing out” any card when possible.

Your FICO score is impacted by your credit utilization rate, which most lenders prefer to be no more than 30%. (We recommend 10% or lower.) The formula for calculating this percentage is:

Credit Utilization Ratio (%) = Current Total Debt (Owed) / Total Credit Limit (Available Credit)

Get a Car Loan

An automobile loan is among the few opportunities that those with poor credit may qualify for that builds credit. A “subprime” car loan market exists today that serves borrowers with bad credit as long as they have verifiable employment or another source of regular income.

Banks, credit unions, and other lenders who otherwise might be reluctant to extend credit to those with a poor credit history may consider offering car loans because they are a form of secured loan.

Unlike an unsecured loan, a car or mortgage loan offers the lender some degree of protection because they are secured by some asset that represents the collateral. For example, a credit union will repossess a vehicle when a borrower fails to make the payments.

Another reason why those with below-average credit may qualify for a car loan is that lenders also protect themselves by imposing very high-interest rates, as is illustrated in the chart below.

Interest Rates on Car Loans for Consumers With Bad Credit

Borrower Category  

Credit Score Range

Auto Loan Rate (New)

Auto Loan Rate (Used)

Subprime

501 – 600

11.03 %

17.11 %

Deep Subprime

300 – 500

14.59 %

20.58 %

Source: Business Insider Personal Finance

If you can’t qualify for a decent interest rate on your own, consider having a family member or friend with good credit be a cosigner for you on the loan.

Consider Becoming an Authorized User

Another option for potentially boosting your credit history involves having someone with a credit card account add you as an authorized user. This can be described as you being added as a secondary account holder.

Unlike establishing a joint credit card account with another person such as a spouse, an authorized user does not share the responsibility for making the payments. This is an arrangement that is common among parents that add their child to a credit card account.

Authorized users can use the card for purchases like the primary cardholder, but has no financial obligations associated with the account. However, shortly after being added as an authorized user, the account will likely appear on your credit report and may improve your score.

Credit builder loans are among the best ways for establishing a credit history and improving your credit score. While improving poor credit history is challenging, credit builder loans and secured credit cards are both among the best available tools for getting the job done.

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