The Ultimate Guide to Credit-Builder Loans in 2023!

Hey, Credit Heroes, are you or your clients struggling to build credit? While credit builder loans are a solid option, even for people with poor credit and no credit history, and today, I'm going to reveal three of the top loans for building credit. So you better stick around. 

So the big question is this. How can we take our passion for helping people with their credit and turn it into a successful business without taking loans and spending a fortune by bootstrapping it from nothing? So we can help the most people and still become highly profitable? That is the question, and this podcast will give you the answer. My name is Daniel Rosen, and welcome to credit repair business secrets. 

Okay, if this is your first time listening to my podcast, every week, I give credit repair tips and advice on bootstrapping your business from nothing. So be sure to click subscribe now and get ready to start changing lives. 

Okay, let's get into this. In the 20 years since releasing my first credit repair software, I have helped 1000s of people repair their credit and file millions of disputes. During that time, I learned the secrets to boosting scores and proven strategies for building credit. credit builder loans are designed to help the people who need them the most people with poor credit and no credit history. They make it possible to boost scores, build credit, save money, and prove creditworthiness all at the same time. credit builder loans are typically offered by local community banks, credit unions, and online lenders. 

They are considered small, low-risk loans ranging from 5000 to $3,000. And with terms of around six to 24 months, if you're unfamiliar with these types of loans when you take out a credit builder loan, the lender deposits the loan amount into a savings account. The lender then reports the loan amount to the credit bureaus, and it improves your credit utilization. You then make monthly payments on that loan, which are reported to the credit bureaus, improving your credit history. And once you pay off the loan in full, the lender returns the money that you paid into the account. Now, if this sounds less like a loan and more like a savings account, that's because it kind of is what some people call credit builder loans, savings secured loans because the loan is secured by the money that you deposit into the account. 

Here's a quick example of how one of these loans might work. First, you take out a credit builder loan of $1,200, you agree to a 12-month payment plan, the lender deposits the $1,200 into a locked savings account, you make 12 on-time monthly payments of $100 each, and pay off the loan, the lender unlocks the savings account, you collect your $1,200 minus any fees over those 12 months, you improve your credit utilization, your credit history and your credit score and you save $1,200 for people without many options who can't qualify for other types of credit. Credit-building loans are some of the best tools available. Here's how this relates to us. 

Our most successful Credit Heroes are the ones that change a tonne of lives and grow giant businesses. They do more than just dispute errors. They teach their clients better financial habits and ways to improve their credit. Taking a little time to educate your clients on credit building helps them to make better financial decisions. They will be less likely to apply for harmful credit cards or loans, making your job of repairing their credit much easier. 

Here's the thing to remember: credit builder loans can be a great tool, but they're not the best financial option for everyone. There are some drawbacks. credit builder loans are affordable for most borrowers, but they typically have higher interest rates than traditional loans. You may also need to pay a deposit, which is usually a percentage of the total loan amount. So if a client has a good credit score and can qualify for a traditional loan with a lower rate, they should focus on other credit-building options. 

Here's why this is important. credit builder loans are best suited for people who are trying to build credit for the first time, those with little credit history, those having trouble qualifying for traditional loans, or those rebuilding after a major financial setback. So, if your client is considering a credit builder loan, they probably need all the help they can get. 

Now, before they apply for anything, remind them to compare multiple lenders. It doesn't matter if they're local or online. Just look for lenders with the best reputation, compare the different interest rates, terms, and fees, and most importantly, make sure the lender reports everything to the credit bureaus. I looked at each of the most popular credit builder loans available online, and there are a few that I recommend. Here's what you need to know. 

First things first, none of the credit builder loans that I'm about to mention are affiliated with me or CRC in any way. Most content creators who recommend credit cards, loans, or lenders only do it because they're getting paid. They're getting some type of commission. But that's not the case here. I don't get paid for promoting them. I'm only recommending these loans because the offers are reasonable, and I truly want to help people. Also, please note that the loan terms listed here are accurate as of October 2023, and they may change 

Okay, with all that being said, here are three of the top loans for building credit: the DCU credit builder loan, digital Federal Credit Union offers credit builder loans from $500 to $3,000 for 12 to 24 months at 5% APR, and you don't have to make payments for the first 60 days, and the money that you pay into your account earns dividends, the DCU credit builder loan doesn't require a credit check applying won't result in a hard inquiry and your payments are actually reported to four credit bureaus. That's Experian, Equifax, TransUnion, and Innovis. While digital Federal Credit Union is available in all 50 states, you will need to become a DCU member to apply for a loan self-credit builder account. SELF offers standard 24-month credit builder loan options ranging from $500 to $3,000 at around 15% APR. The four loans have preset monthly payments starting at $25 plus a $9 administration fee. Self-loans are available in all 50 states, and applying won't result in a hard inquiry. And your payments are reported to the three main credit bureaus. 

The money you pay into your account cannot be touched until the end of the 24-month loan term. But cell phone allows you to cancel the loan at any time and get the money that you paid back minus interest in fees, while self isn't the cheapest option. They do offer additional credit-building products like rent, cell phone, and utility reporting programs. Credit Strong offers a variety of credit builder loans, including longer-term higher limits and even options for building business credit. For personal credit. Their main focus is their install loan of $1,000, with terms ranging from $48 a month for 24 months to $28 a month for 48 months. All credit strong deposit accounts are FDIC insured, and you can cancel your account at any time without paying additional fees. Applying for a Credit Strong loan will require a credit check. But the good news is they only do a soft inquiry, which won't impact your scores. 

Credit Strong loans are not available nationwide. Residents of Vermont and Wisconsin are ineligible. As always, no matter the recommendation, matching the type of credit to the individual is essential. Local community banks and credit unions may offer better terms than the ones that I've just listed. So review all the options. If you want six months of our Credit Repair Cloud software for free and access to our advanced disputing and business courses, go to creditrepaircloud.com/freetraining and sign up for our master class. 

Here's my final point. credit builder loans are low-risk, high-reward options for people with limited options. Taking a little time to educate your clients helps them to make better financial decisions and makes your job of repairing their credit so much easier. And now, for my favorite part of the episode. Every week, I feature one of our Credit Heroes inside our Credit Repair Cloud Facebook community so that you can see firsthand what real people are doing as they run and grow their businesses. And today's spotlight is on Honey Colombo. Honey shared some amazing results she got for one of her clients. One of her clients just graduated from her credit restoration program. He started in the mid to high five hundred, and now all three of his scores are above 815. Well done, honey. Those are life-changing credit scores. That client is lucky they took your program, and they'd probably give you an amazing testimonial. If you haven't already asked for one, Keep up the great work. 

And I'll end by saying If you don't already have a Credit Repair Cloud account, check it out. It's the software that most credit repair businesses in America run on. Just sign up for a 30-day free trial at creditrepaircloud.com/freetrial. And if you'd like to change lives and grow your very own credit repair business, check out our Credit Hero Challenge. It's a live experience that has helped tonnes of Credit Heroes to get certified in disputing and gain confidence as they run their credit repair business on a solid foundation. So they can change a whole lot of lives and make a great living in the process. We're starting the next challenge very soon. So you want to join before the doors close, are you going to have a long wait until the next one? So, sign up right now at creditherochallenge.com. And if you're finding value in the things that I share on this podcast, click below to subscribe and follow. 

Also, give me a five-star review or share the show and help me to change more lives. If you'd like to read the show notes, they're posted on my blog. If you have a question or a comment, drop it down below because I read each and every one of them, and I would love to hear from you. And I'll respond as soon as I can. If you want to learn how to dispute errors and boost credit scores even faster, check out my episode, Credit Report 101. So take care, Credit Hero, and keep changing lives. Hey everybody, it's Daniel again. And really quick, I'd like to invite you to join what I believe is the best thing we have ever created inside the Credit Repair Cloud community. And it is a challenge that we call the Credit Hero Challenge. If you're just planning out your business, or you're just getting started, and you dream of having a successful business of your own. So you can quit your nine-to-five and fire your boss and have financial freedom, or you can add another revenue stream to your existing business. If that's your dream, you need to get into this challenge. We created this challenge to help you create and launch your very own credit repair business to build a proper foundation for a really successful business. This challenge is going to help you understand the strategy, the tactics, and all the things you need to be successful at credit repair. It really is the greatest thing we have ever built, and it will change your life. So I recommend you do it right now. Stop everything, pause this audio, go online, and go to creditherochallenge.com. That's creditherochallenge.com. Join the next challenge, and there's a challenge that starts in just a few days. So go get started right now at creditherochallenge.com