[VIDEO] What is a Credit Builder Loan and How Does it Build Credit?

Official blog of Refresh Financial

[VIDEO] What is a credit builder loan and how does it build or rebuild credit?

If you need to build or rebuild credit without putting down any money up front, a credit builder loan (also known as a cash secured loan, or a credit builder program etc.) could be what you need. It’s not the most common option you’ll stumble across to rebuild credit, but it is, by far, the easiest and most painless way.

 

With a credit builder loan, the proceeds of the loan are held for you in a savings account while you pay it off. As you build equity with your monthly payments, you can access portions of the savings or wait until the entire program is paid off and take the proceeds in one lump sum. Your payments each month are reported to the credit bureaus just like your payments to a credit card or a line of credit would be. It appears, on your credit report as an installment loan. As long as you keep the rest of your credit usage and payments in check, these credit builder loans are an excellent way to rebuild your credit score.

When you have to rebuild credit, it can seem like an insurmountable task. Especially if you’ve had to declare bankruptcy or go through a consumer proposal in the past. It seems like everywhere you turn, lenders are not willing to help you or require money down that you don’t have. You’re being declined for credit cards, loans and lines of credit and it seems like you’ve run out of options to rebuild credit.

It’s important to keep in mind, however, that if you want to rebuild credit, it's not impossible, especially with credit building programs.

Reasons to build or rebuild credit with a Credit Builder Loan:

1. It’s a great way to build or rebuild credit

The primary strength of a credit builder loan is in how it can build or rebuild credit. These types of credit builder programs are superior to other credit products because they pose low risk to you and to the lender, and is a cost-effective way to build your credit score as quickly as possible. As long as you faithfully make your payments every month, it's going to look like you're handling a regular loan with ease. This is important for lenders to see, as you want to look as responsible as possible. You are not going into debt in order to rebuild your credit, but your payments are reported to the credit bureaus and look the same as payments to any other installment type loan. By setting up an automatic payment schedule out of your bank account, there is very little that can go wrong here, and only things that can go right. You’re going to see your monthly payments improve your credit score over time, no matter what your credit history looks like.

2. Lower interest rates

If you’ve got anything less than great credit, you’re probably not going to get the best interest rates from credit card companies, even on a secured card. Taking out a credit builder loan will see you dealing with much lower interest rates than other credit products like credit cards. This means, in the long run, you’re going to save yourself a significant amount of money.

3. Convenience

A credit builder loan only takes minutes to apply for and up to 24 hours to approve. There is no need to come up with funds to secure the program and no matter what your credit history is, you can be up and running with a program to promote credit building in less than a day (no money up front, no credit checks!). Payments to the credit builder loan are set up as automatic withdrawals from your bank account, so you don’t even have to worry about missing a payment. It’s so simple, anyone can do it.

4. Easy to qualify

Whether your credit history is bad or good or you just have no credit at all, it doesn’t matter. Most people get approved for a credit builder loan at Refresh Financial no matter what their credit history looks like. That means no credit application anxiety.

5. Kick Start Your Savings

As you pay down your credit builder loan, the principal is being kept in a savings account for you. Why not continue to save after you’ve finished paying off the loan? What can you do with your savings?

  • Pay Off Your Debts

It feels great to throw a big chunk of money towards your debts and watch them disappear. It's also great for your credit score! Combined with the positive effects that a credit builder loan will have on your score, paying off your existing debts will boost your credit score even higher.

  • Save For A Down Payment on a House

With your rising credit score and a good chunk of money to start your savings with, you could finally buy your first home.

  • Use Your Savings Towards A Secured Card

If you want to boost your credit score even more after completing the credit builder loan, open up a secured line of credit or apply for a secured card with the money you've accumulated.

  • Use As A Down Payment On A Car

If you're tired of paying for endless repairs, it might be time to upgrade to a new vehicle. With your boosted credit score and the payout from the credit builder loan, it should super easy!

  • Use It As A Damage Deposit

If you're looking to move out on your own, this could be your ticket!

  • Invest In Your Career

You can use the payout from the credit builder loan to go back to school or upgrade your skills to better your chances at a promotion or raise.

  • Invest In Your Home

If you’re planning to increase the value of your home, this credit building program is a great excuse to finally get started on some home renovations.

  • Start An Education Fund For Your Kids

Sadly, this is something that many Canadians overlook. With the benefits of the credit builder loan, you can now tuck the payout away and watch it grow for your children down the road.

A credit builder loan from Refresh Financial can secure your financial future so you never have to worry again about being declined for a loan, or only being approved for one at astronomical interest rates.

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    What Canadians are saying about Refresh

    I would like to thank Refresh Financial for helping me get out of a bad spot. I never thought it was possible and almost gave up on things and then I saw Refresh Financial and and gave it a try. At first I was unsure of things but to see my credit score now makes me a believer in this program.

    – Aaron A

    “It hasn’t even been a year yet, possibly only 6-7 months, and my TransUnion score has gone up over 100 points. That was only the tip of the iceberg as recently I was able to get a consolidation loan from my bank that allowed me to move forward and make things easier for me. Talk about second chances!”

    – Angelica M

    “I am now in a position where I am able to obtain credit (just bought a brand-new car and refinanced my mortgage for a fantastic rate) and it took little to no time at all. I would 100% recommend Refresh to anyone looking to rebuild credit with as little hassle as possible.”

    – Cathy M

    “I had not heard of a company doing such a thing before someone suggested it to me and it made sense. I am not very good at saving money and Refresh Financial helped me. I have dealt with them for years now and never had a problem. The customer service is excellent and fast.”

    – Chris C

    Refresh helped me regain credit following a nasty divorce, which left me with a very poor rating. They were able to remarkably help me go from a 480 to a 600 score, in just over a year. Thank you Refresh!”

    – Deb K

    I have watched my credit score jump since being with Refresh and I have already recommended it to friends and family. Thank you for helping me build my credit faster for my future and my children’s future :)”

    – Heather T

    At first I was skeptical because I wasn’t getting funds upfront and had to make payments when I really needed the money. I’ve been in the program a year now and have noticed my credit has improved drastically!”

    – Irene L

    I have been a client of Refresh Financial for approximately 3 years. Since being a client they have improved my credit immensely. Definitely recommend this company to anybody that needs help re-establishing credit.”

    – Jason I

    “I recommend this program to anyone having credit issues. At the end of the agreement, your money is refunded to you. There were times I found myself short on cash and Refresh, with permission, used a portion of my money to clear up my arrears.”

    – Margaret L

    “I would like to thank Refresh Financial for their professionalism, great customer service and for helping get back to a better financial situation. I have always been treated with the utmost respect.”

    – Martine B

    Refresh Financial is an amazing program to help people get back on their feet. I was rock bottom with nowhere to turn. My credit was beyond poor. I would recommend them to anyone. If I can do it surely anyone else can.”

    – Matthew S

    “Great company to deal with for rebuilding credit, very simple process to get started. Good service if you ever have questions.”

    – Mike L

    This business truly cares about its clients. The customer service is always quick to return calls or emails. Their online portal functions very well so as a customer you are always updated as you progress with your loan.

    – Phil J

    “Refresh Financial has made us more aware of how to take care of our financial situation and be more responsible, and making payments on time is rewarding in the end for credit. Thank You sincerely.”

    – Rocky M.

    “Refresh financial is great!!! They boosted my credit score, helped me save money and helped my husband and I buy our house;) I was not only a number to them, they stayed in touch and helped me out along the way. Answered all my questions and concerns.”

    – Sara B

    “Refresh Financial had been exceptionally good to me! I’ve just been out on medical leave and they have accommodated me with my payments without hesitation!! I was in a really bad spot with my credit and they have helped me to try and correct it!! Bravo!”

    – Shannon B

    This company has been nothing but fantastic. They have gone above and beyond to help me. This program has given me the relief and peace of mind I need. I would certainly go back to them and give them names of people who could use this.”

    – Shirley K

    The financial services products are excellent for new immigrants, low-income earners and small business owners. Loans, savings and credit building all in one solution is a perfect fit to help with financial goals and stability.”

    – Soraya H

    “After successfully going through a credit rebuilding loan, I was able to use my built-up equity to purchase a newer vehicle and I have since been approved through a financial institution for a loan.”

    – Tanya W

    “I made some poor credit choices when I turned 18 and have always had this lingering thought of how am I ever going to better my score. Since being with Refresh I have realized that I took the right step towards bettering my future.”

    – Taylor B

    “Thank you Refresh, and my relationship manager for giving me the tools for a better score with a secured card and two credit builder loans. I feel absolutely confident I’m on a better path to financial success. I am happy to be a long term client.”

    – Trevor P

    I’m so excited I’ve joined refresh! I’ve already seen a huge increase on my credit after the first month! The staff are a delight and make this so easy to understand. I strongly recommend Refresh Financial even if you have good credit this will give you a boost and you’re saving money with the reverse loan!”

    – Wayne B