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There are a lot of credit builder loans on the market, so we had to do a lot of research to stack Credit Strong against its competitors.
Our verdict: Credit Strong has the best credit-builder loan on the market today. Their accounts either match or outclass the competition in just about every meaningful way.
They’re also incredibly flexible and allow customers to choose from a whopping seven different credit account types. This Credit Strong review will explain how their loans work, discuss their pros and cons, and help you decide whether they’re right for you.
Credit Strong Pricing and Plans
|Subscribe Options||Subscribe Options||Build and Save|
|Build and Save|
|Build and Save|
|Annual Percentage Rate||13.5%||7.25%||14.04%||14.89%||14.43%||5.907%||5.851%|
|One-Time Admin Fee||$15||$15||$8.95||$8.95||$8.95||$25||$25|
|Amount Reported/ Saved||$1,000||$2,500||$1,000||$1,000||$2,000||$5,000||$10,000|
|Max Repayment Term||Up to 10 Years||Up to 10 Years||12 months||24 months||24 months||Up to 10 Years||Up to 10 Years|
How Does Credit Strong work?
As you can see in the table above, Credit Strong offers three types of credit-builder accounts. Each of them has a different focus: minimizing your monthly payment, maximizing your monthly savings, and improving your credit as much as possible.
Their credit-builder loans function similarly to others in the market. Here’s how they work:
- You select a preferred account type and apply online
- Upon approval, Credit Strong sets aside a lump sum in a locked savings account
- You make a monthly payment that includes both principal and interest
- Credit Strong reports your payment history to each major credit bureau
- At the end of the term, you get access to the money in the savings account
If all goes well, you can end up with a higher personal credit score (note the difference between personal and business credit) and more money in the bank.
Also Read: Chime Credit Builder Review
Of course, because you don’t receive access to the cash in the savings account until you’ve paid off the loan, it won’t help you buy anything anytime soon.
While it functions like an installment loan during the repayment term, you won’t get any money upfront. If you need funds now to help you cover a purchase, a credit-builder loan is not for you. You’d be better off with a traditional installment loan or credit card.
Is Credit Strong Legit?
Whenever you consider doing business with a third party online, you should always do your due diligence to verify their trustworthiness.
That’s extra important for something like taking a loan from Credit Strong, which involves sharing sensitive personal data and transferring large sums of money, potentially for years at a time.
Fortunately, it’s pretty easy to verify that Credit Strong is both safe and trustworthy. They’re a division of Austin Capital Bank, one of the top-rated banks in the country.
The Texas-based financial institution receives a 5 Star Safe and Sound Rating from BankRate, a 5 Star Superior Rating from Bauer Financial, and an A+ Health Rating from LendingTree.
In 2020, the bank ranked #1,134 on Inc. 5000’s list of fastest-growing privately held companies in America. It’s also a member of the Federal Deposit Insurance Corporation (FDIC), which requires jumping through quite a bit of regulatory hoops.
With Credit Strong, your information and money are as safe and secure as possible.
How Much Will Credit Strong Help Improve My Score?
Every bank, credit union, and online lender claims their credit-builder accounts improve your credit score, but Credit Strong went the extra mile to document exactly how much.
They gathered data on over 50,000 of their customer accounts and tracked their results. They found that the average account holder increases their FICO Score by:
- More than 25 points within their first three months
- Just under 40 points in the first nine months
- Almost 70 points after twelve months of timely payments
Those were just the results of those who had a credit score at the start. Almost 10% of account holders had no credit history upon opening their Credit Strong account.
They still saw impressive benefits, though. After making their monthly payment on time for twelve months, these account holders were able to build a credit score between 630 and 650, on average.
That falls into the FICO’s fair credit range, which could get you a beginner credit card, personal loan, or maybe even a mortgage.
These are impressive results for such a short amount of time, and you can match them if you make all your payments when they’re due. Remember, that’s worth 35% of your FICO Score, the most popular model in use.
These accounts are a much better way to improve bad credit than a credit repair company (which will usually charge you lots of money for negligible results).
Not only will they improve your payment history, but they can diversify your credit mix if you currently hold revolving credit only and help you finish with more cash in the bank than when you started.
Of course, these are just the average Credit Strong account results, which means you might be able to do even better! Everyone’s personal credit profile is unique, and your results will be too.
Pros of Using Credit Strong:
Credit Strong’s credit-builder loan has a lot of distinct advantages over its competitors in the market. Take a look at some of the most significant ones below.
Reports to All Three Credit Bureaus
A credit reporting bureau, also known as a credit reporting agency, is a company in charge of compiling your credit history into a credit report.
These reports serve as the basis for your credit score, so if you were to take a credit-builder loan from a bank or lender whose activities don’t show up on your reports, you’d be wasting your time and money.
You might be surprised to know that your lender has no legal responsibility to share your activities with the bureaus. That includes lenders who provide credit builder loans, some of which only report to one credit bureau.
Fortunately, Credit Strong reports your credit history to Experian, Equifax, and TransUnion, so you can be sure that your timely payments will benefit you.
Build a Long Payment History
Your payment history is worth 35% of your FICO Score, making it the most heavily weighted factor. Of course, the longer and more consistent your payment history, the more beneficial it will be.
For example, a bank will be much more willing to lend to you if you’ve made all your monthly payments on time for the last five years than if you’ve only been doing so for six months.
Credit Strong’s credit-builder loan is unique in that it allows you to set a repayment term of up to ten years! That’s far higher than the typical credit-builder account, which usually tops out at just two years (check out Self Lender for a comparison).
No Credit Check
Another reason to use Credit Strong is that they don’t check your credit when you apply. Not only does that make them easily accessible, even if you have bad credit or no credit history, but it also means you avoid a hard inquiry on your credit report.
Hard inquiries occur whenever a loan or card issuer checks your credit score, and too many of them can cause you to lose points. Even just avoiding one will usually save you around five points on your score.
As a bonus, Credit Strong provides a free copy of your FICO Score 8 every month so you can watch yourself build credit in real-time over the life of your loan.
Cancel Any Time For Free
Building credit usually exposes you to some level of risk to your credit score. That’s because the accounts are only an opportunity for you to demonstrate how you use credit, and there’s no guarantee that you’ll use it wisely.
If you miss your payments and show that you’re incapable of handling debt properly, you’ll end up doing more harm than good to your credit score.
Credit Strong’s credit-builder loans help minimize your credit risk, though, by allowing you to cancel your account at any point during the repayment term – for free.
That means that if you lose your job or overextend yourself and realize that you won’t be able to make your payments, you can cancel the account and avoid damaging your score.
You’ll even get to keep the portion of the savings account that you paid off up to that point!
Owned by an Accredited Bank
Both your credit and your money are of the utmost importance, so you should only ever bank with someone you trust.
As a division of Austin Capital Bank, an accredited and FDIC-insured financial institution, you can rest easy when you borrow from Credit Strong.
Cons of Using Credit Strong:
No credit-builder loan is ever going to be without risk. Credit Strong’s offerings are no exception. They have a lot going for them, but they’re not a magic bullet.
Here’s what you should be aware of before you use one.
Late Payments Will Hurt Your Credit
Credit Strong’s credit-builder loan is an opportunity like any other. You get out of it what you put into it. If you use it correctly and make all of your payments on time, it can radically improve your credit score.
However, if you’re late on payments or stop paying entirely without notice, the account will cost you points instead of helping you build credit. After 30 days of non-payment, Credit Strong reports late payments to the credit bureaus.
Fortunately, if you know you’re not going to be able to pay, you can always cancel the account before you get reported for being delinquent.
It’s Technically a Loan, But You Don’t Get Money Upfront
A Credit Strong account doesn’t pay out until the end of your loan term. If you need money to help you purchase a vehicle, help remodel your house, or any other large purchase, a credit-builder loan won’t help you.
You’d be better off with a personal loan or an auto loan. Fortunately, repaying these will help you rebuild your credit too. Even student loans, for all their other burdensome qualities, can help you build credit.
If you can’t qualify for these because you currently have bad credit, you could probably still get a bank to give you a secured credit card to finance your smaller monthly bills, like gas and groceries.
Just be aware that your credit limit will probably be low, so you’ll have to monitor your credit utilization carefully.
Eligibility to Apply for Credit Strong
Credit-builder loans are readily accessible by design. Since their purpose is to help people with low or no credit build up a strong credit history, they wouldn’t do much good if those consumers couldn’t qualify for them.
These are the only eligibility requirements for Credit Strong:
- Be at least 18 years old and a permanent U.S. resident with a physical U.S. residence (address)
- Present a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Own a checking account, debit card, or prepaid card in good standing
- Have a mobile phone number (or Google Voice account) and email address
Credit Strong won’t check your credit at any point in the application process, so you can receive an account and start building credit even if you don’t have a good credit score.
What is the Cost of a Credit Strong Loan?
The total cost of a Credit Strong credit-builder loan depends on the type of account that you choose. Each one comes with a different admin fee and interest rate.
Fortunately, the admin fee is always a one-time thing, and they’ll only charge you upon approving your application and setting up your locked savings account. It ranges from $8.95 to $25 and correlates with the size of your loan.
Your interest rate can vary a bit more significantly. The cheapest option is the Magnum 10000 account which costs 5.851% APR, while the most expensive one is the Build and Save 1000 in 24 Months at 14.89%.
You may be subject to additional fees and interest if you miss monthly payments. If you’re late by 15 days or more, you’ll be subject to a late fee. Paying late could also throw off your repayment schedule and give interest more time to accrue.
While you can pay off your Credit Strong account ahead of time and reduce the effective interest rate, it can have the unwanted side effect of shortening your payment history and preventing you from improving your credit score as much as you would otherwise.
Nick Gallo is a Certified Public Accountant and content marketer for the financial industry. He has been an auditor of international companies and a tax strategist for real estate investors. He now writes articles on personal and corporate finance, accounting and tax matters, and entrepreneurship.