If you’re struggling to build credit or find yourself frustrated by constant denials, you’re not alone. Many people face this challenge, especially when starting with little to no credit history. But there’s a solution that could help you improve your credit score while also saving money—Self Financial. This service allows you to build credit without the need for a credit score check or a hefty upfront deposit. Let’s dive into how Self Financial works and whether it might be the right fit for you.
What Is Self Financial?
Self Financial, previously known as Self Lender, was founded in 2014 with the mission to help individuals build or improve their credit scores. Unlike traditional lenders, Self Financial doesn’t require a credit score to approve you, which is ideal for people just starting out or trying to repair their credit.
Instead of offering conventional loans, Self Financial provides a unique product called the Credit Builder Account. This account allows you to take out a loan, but the catch is that the funds aren’t released to you immediately. Instead, they’re held in a secure account while you make regular monthly payments. By reporting your payments to all three major credit bureaus, Self Financial helps you build a positive credit history, which is crucial for improving your credit score over time.
Since its inception, Self Financial has helped customers increase their credit scores by over 2.3 million points. The company partners with trusted banks like Lead Bank, Sunrise Banks, and Atlantic Capital Bank to ensure your money is safe and FDIC-insured.
How Does the Credit Builder Account Work?
A Credit Builder Account from Self Financial operates differently than a typical loan. Here’s how it works:
- Choose Your Loan Terms: You select a loan amount and repayment plan. You can choose from either a 12-month or 24-month term, depending on your budget and goals.
- Monthly Payments: Self Financial holds the money in a Certificate of Deposit (CD) at one of its banking partners. Each month, you make regular payments towards the loan, which helps improve your payment history—a major factor in your credit score.
- No Upfront Deposit: Unlike a secured credit card, you don’t need to deposit a large amount of money to start. All you need is a one-time $9 administrative fee, which is much more affordable than most credit-building options.
- Build Credit: As you make payments, your credit history is built, and those payments are reported to the three major credit bureaus: Equifax, TransUnion, and Experian. On-time payments will help increase your credit score.
Once you’ve made all your payments and the loan term ends, Self Financial releases the funds to you. You can either receive a check or have the money transferred to your bank account.
What Are the Fees?
One of the key advantages of Self Financial’s Credit Builder Account is its affordability. The only fee you need to worry about is the $9 administrative fee to get started. However, you will pay interest on the amount you borrow. The interest rate depends on the loan terms you choose. Here’s a breakdown:
| Monthly Payment | Loan Length | Administrative Fee | APY | Final Payout |
|---|---|---|---|---|
| $25 | 24 months | $9 | 15.92% | $520 |
| $48 | 12 months | $9 | 15.65% | $539 |
| $89 | 12 months | $9 | 15.79% | $991 |
| $150 | 12 months | $9 | 15.91% | $1,663 |
These rates are competitive, and the flexibility in choosing your monthly payment helps you find a plan that fits your financial situation. You won’t be penalized for paying off your loan early, though doing so might limit the amount of time your payments are reported to the credit bureaus, potentially reducing the full benefit of the program.
Alternatives to Self Financial
While Self Financial’s Credit Builder Account is an excellent option, it’s not the only choice for those looking to build or improve their credit. Secured credit cards are another popular method for rebuilding credit.
However, Self Financial’s Credit Builder Account has a few advantages over secured cards. For example, with a secured credit card, you typically need to make a deposit upfront, and you can reuse the line of credit as long as you continue to make payments. In contrast, the Credit Builder Account is a one-time loan that helps you build credit while avoiding additional revolving debt. Also, you don’t need to worry about being turned down for a secured credit card if your credit history is less-than-perfect, which is a common problem.
How to Open a Credit Builder Account
Getting started with Self Financial is easy and can be done entirely online through their website or mobile app. Here’s what you need to get started:
- Sign Up: Visit Self Financial’s sign-up page and create an account using your email address or Facebook account. Signing up won’t impact your credit score, as Self Financial only does a soft pull to verify your identity.
- Choose Your Plan: Select the loan terms and monthly payment that best fit your budget.
- Make Your Payments: Start making your monthly payments. These will be reported to the credit bureaus to help improve your credit score.
- Receive Your Funds: Once you complete the loan term, Self Financial will release your funds to you.
The Bottom Line
Self Financial’s Credit Builder Account is a great way to build or improve your credit score without requiring a large upfront deposit or a perfect credit history. By making small monthly payments, you’re not only saving money but also creating a positive credit history that will benefit you in the long run. The low cost of entry and straightforward process make this an appealing option for anyone looking to boost their credit score and secure a more solid financial future.
If you’re ready to start building your credit without the stress of high fees or complicated requirements, Self Financial could be the solution you need.
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