In this Self Financial review, we’ll explain how to raise your credit score and increase your savings at the same time. Want to know how it works? Keep reading!
If you’re trying to build credit, you know first-hand how discouraging rejection letters can be. You’re not alone in your frustration. A U.S. News study found about 50 percent of people know they’ll either be denied credit or have to suffer through a super-high interest rate if they are approved.
With so much riding on your credit score, those results are grim.
You need a credit score to qualify for a mortgage, loan, credit card, utilities – even employers can run credit checks to see if you’re a good candidate. But banks and lenders can keep saying “no” if your credit score is subpar.
How can you establish a solid credit history if no one will take a chance on you?
Luckily, there’s a solution. Self Financial will help you build credit without a hard pull on your credit report. The company also doesn’t use your credit score to determine whether you’re approved or not, making this an excellent option for people with a low credit score or no history.
If you’re looking for a way to boost your credit score, Self Financial could be the answer. Keep reading our Self Financial review to see if it can help you.
What is Self Financial?
Self Financial is committed to helping people build a better credit score. The company was founded in 2014 as Self Lender. Trustpilot shows a Self Lender review of four out of five stars.
Despite the fact that the company changed its name to Self Financial, it continues to provide installment loans that can help improve your credit score.
Essentially, they match people with poor credit (or those who are just starting out and don’t have a credit history) with a Credit Builder Account to establish a positive payment history. Since payment history makes up 35 percent of your credit score, this kind of account can help to raise your credit score.
As of 2018, Self Financial has increased its customers’ credit scores by more than 2.3 million points. This financial technology company isn’t a bank, though. Instead, it partners with Lead Bank, Sunrise Banks, and Atlantic Capital Bank to get you on your way to a solid financial future.
What is a Credit Builder Account?
A Credit Builder Account from Self Financial is your ticket to a new and improved credit score. It’s basically a loan that allows you to borrow money. The only difference is that the cash isn’t given to you right away.
Instead, Self Financial holds onto the funds while you make small monthly payments to repay the balance in full. When your loan is paid up, Self Financial releases the money to you free and clear. The full loan amount is yours to spend any way you want.
If you’ve heard of a secured credit card, a Credit Builder Account might sound familiar. There’s one huge difference: A secured credit card requires you to have the cash upfront to open the account.
But for a Credit Builder Account with Self Financial, all you need to get started is a single $9 administrative fee. This low startup cost is a great advantage because just about anyone can afford $9 to help their credit score.
How Do Credit Builder Accounts Work?
Credit Builder Accounts take a unique approach to help your credit get back on track. You pick your payment amount and can choose between loan terms of 12 or 24 months.
Getting started is easy because Self Financial doesn’t do a hard pull on your credit report. There’s no security deposit or any other upfront cash needed to guarantee your loan.
Once your application goes through, Self Financial holds the funds in a Certificate of Deposit (CD) until your term is up. The CD is put in your name at one of Self Financial’s banking partners, and the money is FDIC-insured, so there’s no risk of loss.
Your monthly payments are reported to all three credit bureaus – Equifax, TransUnion, and Experian. Since payment history makes up more than a third of your credit score, you could see your score go up after just a few months.
As you continue to repay your loan and make on-time payments, Self Financial reports them, boosting your score even more. If you pay off your loan early, the company doesn’t charge any penalties or fees.
Keep in mind that the reason you signed up for the service in the first place was to improve your credit score. Paying your loan early means you’ll have fewer reports of on-time payments, so your score won’t get as big a boost as it could have if you’d stuck it out for the entire term.
The money held in the CD is available for withdrawal once you pay the loan in full. Self Financial can send you a check for the loan amount or transfer the money to your bank account.
Credit Builder Account Fees
Self Financial is more affordable than other credit-building options and can help your credit without draining your wallet. The Credit Builder Account is perfect for people who have struggled to pay bills and save money because it has low fees.
Plus, you’re not handing over a bunch of cash to get started with an account. Once you pay the one-time administrative fee, Self Financial gets your account up and running.
That said, you pay interest whenever you borrow money, and Self Financial is no exception. The interest rate depends on the monthly payment you pick and how long you want your loan to last. Below are some examples.
|Monthly Payment||Length of Loan||Administrative Fee||APY||Your Payout Amount|
|*Current as of 10/18/2019|
Committing to a higher monthly payment won’t build your credit score any faster, but you could save money this way since you’ll pay less in interest fees.
Whichever loan option you choose, make sure you’re comfortable making the payments. You’re using Self Financial to build a positive payment history. Biting off more than you can chew with a too-large monthly payment could cause a late payment. And late payments will hurt your credit big time.
Alternatives to Self Financial
The most obvious alternative to a Credit Builder Account from Self Financial is a secured credit card. However, these cards are very different.
Self Financial offers installment loans to help build your payment history. With an installment loan, you borrow a set amount and pay it back. You can only use the money once, and the account is closed as soon as your loan is fully repaid.
A secured credit card is a revolving line of credit, which means you can use the money repeatedly as long as you keep repaying it.
Both are viable options to improve your credit score, but choosing Self Financial is a smart move if you don’t want to stretch yourself too thin and end up with more payments than you can manage.
One major drawback to a secured credit card is the large payment you need upfront. The deposit you make when you open the account is used to secure the amount you spend. That way, if you don’t pay your bill, the credit card company can repay itself from your deposit.
The amount you need for a deposit can vary. You should expect to have at least $200, but some issuers can require $2,500 or more.
We like Self Financial because there’s no security deposit required. Plus, the company doesn’t base its decision on your credit history, so you’re pretty much guaranteed to get approved. With a secured credit card, the issuer will check your credit. It can deny your application if your credit history includes bankruptcy or other red flags.
How to Open a Credit Builder Account
The process to open a Credit Builder Account is done online from a web or mobile browser. You need a bank account, debit card, or prepaid card to make your payments. You’ll also want to have your Social Security number on hand before you start, since Self Financial uses that to verify your identity.
Visit the company’s sign up page to create an account with an email address or Facebook account. Remember: Signing up doesn’t impact your credit score. Self Financial does a soft pull, but your credit history isn’t part of its approval process. No matter how bad or nonexistent your credit history is, you can feel confident when applying for a loan from Self Financial.
Self Financial: The Bottom Line
A Credit Builder Account from Self Financial is the way to go if you want to raise your credit score. As a bonus, the account also serves as a savings account. While you are technically taking out a loan, the cash isn’t sent to you until you repay your loan in full, so you’re not increasing your debt. With Self Financial, you’re paying yourself. The money is sent to you at the end of your loan term with no strings attached.
Hopefully, this Self Financial review will help you decide if it’s a good move for you. Here’s to boosting your credit score!