If you have poor or no credit, it may seem like getting a loan is impossible.
A lender’s main concern when considering a loan application is whether or not the applicant will be able to pay the loan back. Your credit score is a way for lenders to know if you are trustworthy enough to loan to. A credit score takes into account payment history and allows lenders to determine if the applicant is risky or not.
A credit builder loan is designed for people who have poor credit or little to no credit history to build credit. It’s designed to help you eventually qualify for other loans.
What Is A Credit Builder Loan?
Building up your credit takes patience. To show lenders you are consistently reliable and make on-time payments, you’ll need to put in the work. Credit builder loans are a great way to begin establishing a good credit score.
A financial institution, such as a credit union, deposits a small amount of money into a secured savings account. The borrower then pays the money back in monthly installments, with interest, over a set period of time. At the end of the loan’s term, the borrower receives the total amount of the credit builder loan in a lump sum, plus any interest earned, if the lender offers interest.
RMLEFCU’s credit builder loan features:
No money needed to secure the loan
Eligible to members 18 and older who have means to repay the loan
Low monthly installment payments
Convenient automatic payments
Easy application process
Quick, local decision-making
Attentive, friendly service from start to finish
How Does A Credit Builder Loan Work?
This loan helps build credit by providing an opportunity for people who want to build their credit to make small monthly payments.
With this loan, your credit history will show you can make regular, on-time loan payments.
Most credit builder loans are small, which means they will have small monthly payments. Interest rates vary by bank, so be sure you compare all your options to get the best rate.
Where Can I Find A Credit Builder Loan?
Rocky Mountain Law Enforcement Federal Credit Union, of course!
Credit Unions often list loans and loan details online and have lower rates than traditional banks. Take a look at the loans RMLEFCU offers.
Some traditional banks also offer credit builder loans to help clients build a good credit score and work toward good financial health.