Self Offers Credit-Builder Loans Without Money Upfront

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Self-Offering Credit-Builder Loans without Money Upfront
In time payments can get your credit rating off to a good start or aid in recovering from an error.
By Bev O'Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O'Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She has a bachelor's degree in journalistic studies from Auburn University and a master's in education from Georgia State University. Before coming to NerdWallet she was employed by daily newspapers, MSN Money and Credit.com. Her work was featured in The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and other publications. Twitter: @BeverlyOShea.





Feb 3, 2023


Edited by Kathy Hinson Lead Assigning Editor Personal financial, credit scoring, managing money and debt Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years working at The Oregonian in Portland in positions such as copy desk chief and team director of design and editing. Previous experience included news and copy editing for a variety of Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in mass communication and journalism in Iowa's University of Iowa.







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If you do not have a credit history or damaged credit, getting credit cards or a loan could be a challenge.
It is possible to explore a secured credit line but typically, you need to have money for the deposit. But , like those provided by Self, offer consumers a possibility to use without having to pay in advance.
If you get the credit-builder loan, the loan amount will not be available to you immediately. Instead, your loans are held in a certificate of deposit that is covered by the Federal Deposit Insurance Corp. Once you've made all the payments, the funds are given to you.
Company co-founder and CEO James Garvey says he wanted to "create an easy method for people to build credit histories the first time." He noted that credit-builder loans, long offered by some credit unions as well as community banks "have been proven to assist people establish credit histories."
Loans from Self are open to U.S. residents in all 50 states.
How Self -- also known as Self Lender -- works
When a loan application is approved by Self, the loan amount is transferred to the form of a deposit certificate with one of its partner banks. You'll be making regular payments throughout the duration of your loan. Once all the payments have been made and you're able to access the funds minus any costs of finance (the administrative fee and the interest you are charged). If you decide to close your account prior to paying it off, you can access the money from the CD, but minus the balance you have to pay.
Self provides one- and two-year terms, based on what your monthly installment to be. The lowest payment is $25 a month but you also have the option of monthly payments of $35 or $150 each month. There's a non-refundable administration fee of $9. The APRs are not more than 16%, as per the company. A sample product: $25 per month payment, a 24-month period with a $9 administration fee at an 15.91% Annual percentage rate. Refer to the most recent pricing options.
Self-reports your payments to the three major credit bureaus: Equifax, Experian and TransUnion. Late payments can hurt the credit you are trying to build. After about six months, your repayments should result in an if you don't already have one; your VantageScore could be generated earlier.
A bigger loan isn't going to make it easier to build your credit substantially quicker. Be sure to pick the amount of your payment that's suitable for you. It could affect your credit, and that's the last thing you'd want.
During the period of repayment, you have access to free credit monitoring as well as a produced by Experian to track your credit score's growth. You can also monitor your credit score by obtaining a TransUnion credit report, which is available on NerdWallet.
How to apply for a Self loan
The loan application is submitted via the internet. To qualify, you must:
At minimum 18 years old.
Have a long-term U.S. resident.
You must have a Social Security number.
You must have an account at a bank or a debit card; a prepaid card is OK.

It is unlikely that you have had any negatives, like bounced checks or fees that weren't paid in the past 180 days.
Credit-builder loans vs. secured cards
A credit-builder loan is different from a credit-builder loan in two key ways:
There is no need to pay upfront to get the loan however, you will require income to make the monthly installments. If you have a secured credit card, you usually have to make an upfront deposit, and that amount is generally your credit limit.
The money is not available in the deposit until the loan is paid back. With a secured card, you are able to use your credit limit at any timebut doing this will make you more vulnerable and harm your credit score until the balance is once again low.

Know how your credit is scored
Check your score for free and the variables that affect it, and get tips on how to continue building.










Self offers a related secured credit card
Self now offers a secured by money you have made payments on the Self loan balance. To qualify:
You must have made at the minimum of $100 worth of repayments to your loan.
Your account needs to remain in good order.
Your final three payments must have been paid in time.

There's no credit inquiry at all, and -- like the loan -- the secured card reports your payments to the three major credit bureaus.
It gives you two kinds of credit which are revolving (the credit card) and installment (the loan). It can help to build credit faster as the scoring formulas reward consumers for handling different types of credit in a responsible manner.
Self loan fees and penalties
Payments 15 days or more late will incur the cost equal to 5% of the scheduled monthly payment. Any payments that are 30 days or more past the due date will be reported to the credit bureaus, which could negatively impact your score.
If the account is late it will eventually be shut down and the loan will be listed as "defaulted" in your credit report. You get the loan amount of the deposit, minus the fees and amount you were owed at the time of closing the account. In the event of a default, it can also damage your credit.
Do you want nerdy advice that's tailored to your budget? Bring all your money into one account, and receive customized information to make the most of it.






The author's bio: Bev O'Shea is a former credit writer at NerdWallet. Her work has been published in publications such as the New York Times, Washington Post, MarketWatch and elsewhere.







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Be aware of how your credit score is scored
Check your score for free and the factors that influence it, and get tips on how to keep building.

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