WalletHub makes it easy to find the best credit-builder loans.
Updated Jun 7, 2024
Fact checked
Written by John Kiernan
Managing Editor
Reviewed by Alina Comoreanu
Senior Researcher
The best credit-builder loans offer low interest rates and help people quickly establish or improve their credit score. A credit-builder loan works like the reverse of a traditional personal loan, in that the borrower pays monthly installments to the lender and then receives the money back at the end. The lender keeps the amount of the loan in a savings account that the borrower gets access to at the end. Sometimes this savings account is interest-bearing and sometimes it is not.
To identify the best credit-builder loans, WalletHub compared some of the most popular offers from banks, credit unions and online lenders.
Best Credit-Builder Loans in 2024
Overall:Republic Bank Credit Builder Loan- Interest Refund:Alltru Credit Union Credit Builder Loan
- Online Lender:Self Credit Builder Account
- No Credit Check:MoneyLion Credit Builder Plus
- Low APR:Digital Federal Credit Union Credit Builder Loans
WalletHub
Why People Trust WalletHub
Unlike other sites that only promote loans they're paid by, WalletHub's editors focus on finding the best loans. WalletHub makes it easy to find the best credit-builder loans.
You can typically find credit-builder loans at community banks, credit unions and a few online lenders.
WalletHub's best personal loan picks and ratings are completely independent and not provided, commissioned, or endorsed by any lender. In addition, our editors follow a strict editorial policy. Some offers may come from WalletHub's advertising partners.
Best Credit-Builder Loans
BEST CREDIT-BUILDER LOANS OVERALL
Republic Bank Credit Builder Loan
Republic Bank Credit Builder Loan
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| APR | Origination Fee | Term | Min Credit Needed |
|---|---|---|---|
| 9.00% - 9.50% | $10 of loan amount | 12 - 24 months | Bad |
APR
9.00% - 9.50%
Origination Fee
$10
of loan amount
Term
12 - 24 months
Editors’ Thoughts
The best credit-builder loans come from Republic Bank, which puts the funds for your credit-builder loan into an interest-bearing account. This helps reduce the overall cost of your loan since you’re earning money at the same time. The APRs on the loans are relatively low, too, at around 9% - 9.5%. The loans range from $500 - $1,500 and have repayment terms of 12, 18, or 24 months.
Key Facts About Republic Bank Credit-Builder Loans:
- APRs: 9% - 9.5%
- Loan sizes: $500 - $1,500
- Payoff periods: 12, 18, or 24 months
- Other notable features: Puts funds in an interest-bearing account
BEST CREDIT-BUILDER LOANS WITH AN INTEREST REFUND
Alltru Credit Union Credit Builder Loan
Alltru Credit Union Credit Builder Loan
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| APR | Origination Fee | Term | Min Credit Needed |
|---|---|---|---|
| 12.00% - 18.00% | 0% of loan amount | 6 - 24 months | Limited History |
APR
12.00% - 18.00%
Origination Fee
0%
of loan amount
Term
6 - 24 months
Editors’ Thoughts
Why It Has Some of the Best Credit-Builder Loans: You can get a credit-builder loan of $300 - $2,000 from Alltru Credit Union and pay it off in Up to 24 months. Alltru also offers a refund for 50% of all the interest you pay over the life of the loan. Plus, the APR is 12% - 18% to begin with, which is decently low.
To qualify for membership in Alltru Credit Union (formerly 1st Financial Credit Union), you need to be a Missouri resident who lives in St. Louis, St. Louis County, or St. Charles County. Relatives of existing members can also join.
Key Facts About Alltru Credit Union Credit-Builder Loans:
- APRs: 12% - 18%
- Loan sizes: $300 - $2,000
- Payoff periods: Up to 24 months
- Other notable features: Refund of 50% of interest paid
BEST ONLINE CREDIT-BUILDER LOANS
Self Credit Builder Account
Self Credit Builder Account
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| APR | Origination Fee | Term | Min Credit Needed |
|---|---|---|---|
| 15.69% - 15.97% | 0% of loan amount | 24 months | Limited History |
APR
15.69% - 15.97%
Origination Fee
0%
of loan amount
Term
24 months
Editors’ Thoughts
Why It Has Some of the Best Credit-Builder Loans: Self (formerly Self Lender) is the best online lender for a credit-builder loan because it offers loans with payments as low as $25 per month for 24 months. Self credit-builder loans are also available to people in all 50 states.
The loans have an APR of 15.69% - 15.92% and an administration fee that's around $9. That’s neither the highest nor the lowest fee currently being charged by credit-builder loan providers.
Key Facts About Self Credit-Builder Loans:
- APRs: 15.69% - 15.92%
- Loan sizes: $520 - $3,076
- Payoff periods: 24 months
- Other notable features: Anyone can apply.
BEST CREDIT-BUILDER LOANS FOR CREDIT REPAIR
MoneyLion Credit Builder Plus
MoneyLion Credit Builder Plus
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| APR | Origination Fee | Term | Min Credit Needed |
|---|---|---|---|
| 5.99% - 29.99% | $19.99 a month | 12 months | Limited History |
APR
5.99% - 29.99%
Origination Fee
$19.99 a month
Term
12 months
Editors’ Thoughts
Why It Has Some of the Best Credit-Builder Loans: MoneyLion offers a service called Credit-Builder Plus. This service has credit-builder loans up to $1,000 with a payment timeline of 12 months and an APR range of 5.99% - 29.99%.Unlike other services, MoneyLion offers a portion of your loan funds right away. There is a $19.99 monthly membership fee for Credit-Builder Plus eligibility, though.
Key Facts About MoneyLion Credit-Builder Loans:
- APRs:5.99% - 29.99%
- Loan sizes: $100 - $1,000
- Payoff periods: 12 months
- Other notable features: Has loans specifically for credit repair that give you a portion of your money right away
BEST CREDIT-BUILDER LOANS WITH A LOW APR
Digital Federal Credit Union Credit Builder Loans
Digital Federal Credit Union Credit Builder Loans
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| APR | Origination Fee | Term | Min Credit Needed |
|---|---|---|---|
| N/A | N/A | 12 - 24 months | Bad |
APR
N/A
Origination Fee
N/A
Term
12 - 24 months
Editors’ Thoughts
Why It Has Some of the Best Credit-Builder Loans: Digital Federal Credit Union has very low APRs on its credit-builder loans, charging only 5%. Plus, the cost is reduced even further by the fact that DCU puts the loan money in an interest-bearing account.
The loans range from $500 - $3,000 and last for 12 - 24 months. While you must become a DCU member to get a loan, anyone can join the credit union.
Key Facts About Digital Federal Credit Union Credit-Builder Loans:
- APRs:5%
- Loan sizes: $500 - $3,000
- Payoff periods: 12 - 24 months
- Other notable features: Puts funds in an interest-bearing account, and anyone can apply
Best Credit-Builder Loans Comparison
| Lender | APRs | Loan Amounts | Payoff Periods |
| Republic Bank | 9% - 9.5% | $500 - $1,500 | 12, 18, or 24 months |
| AllTru Credit Union | 12% - 18% | $300 - $2,000 | Up to 24 months |
| Self | 15.69% - 15.92% | $520 - $3,076 | 24 months |
| MoneyLion | 5.99% - 29.99% | $100 - $1,000 | 12 months |
| Digital Federal Credit Union | 5% | $500 - $3,000 | 12 - 24 months |
Tips for Getting a Credit-Builder Loan
Compare several choices
Credit-builder loans can vary pretty widely in terms of cost, so it’s best to go for one that has a low APR. If the lender also puts the money in an interest-bearing account, or gives back some of the interest you pay on the loan, that’s even better.
Be diligent about payments
The whole point of a credit-builder loan is to build a positive credit standing or improve your current credit score. The only way you will accomplish that is by making all of your monthly payments on time. Having any late payments can completely defeat the purpose of the loan.
Look locally
While WalletHub has collected some of the best options for you to consider, your local banks and credit unions may have worthwhile offers as well. You should visit them or give them a call to find out the terms of their loans, and then compare those terms to popular offers before deciding which to apply for.
Consider credit cards
Credit-builder loans aren’t the only way for people to build or rebuild their credit. There are plenty of credit cards available to people with no credit or bad credit, and they report account information to the major credit bureaus monthly. As long as your account is in good standing each month, the credit card will help improve your credit.
Plus, with a credit card, you’ll continue to build credit as long as the account remains open. With a credit-builder loan, you’ll only build credit for a limited number of months.
Methodology
To identify the best credit-builder loans, WalletHub’s editors looked at offers from some of the most popular lenders on the market. We compared these lenders based on six overall categories: APRs, loan sizes, fees, loan requirements, transparency and the application process. We also considered special features that the loans might have, like interest-bearing accounts, along with whether the loans are open to all consumers.
Best Credit-Builder Loans FAQ
Finding the best personal loan can be tough. But you’ve got the knowledgeable WalletHub community on your side. We encourage everyone to share their knowledge while respecting our content guidelines. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not the financial institution’s responsibility to ensure all posts and questions are answered.
Most Popular
22
Upvotes
Credit-Builder Loans Guide
22
Adam McCann, Financial Writer
@adam_mcan
What Is a Credit-Builder Loan?
A credit-builder loan is a unique type of loan that is intended to help people increase their credit score without any risk to the lender. A credit-builder loan gives the borrower an opportunity to demonstrate that they can handle making monthly payments on time, and their credit score increases in the process.
Throughout the life of the loan, the lender reports monthly payment information to the credit bureaus, which is why a borrower will see their credit score increase if the payments are made on time. The main difference compared to a traditional loan is that the borrower doesn't get access to the funds until the loan is paid off, which makes it easy for unproven borrowers to get approved.
View entire answer
6
Upvotes
How much is a credit builder loan?
Reply
6
Grace Enfield, Content Writer
@grace_enfield
A credit-builder loan is $300 - $3,000, which you will need to repay over 6 to 24 months. You will have to pay interest on the loan amount at an annual rate of around 6% - 16%, along with a one-time fee to open the account in some cases. This fee could be around $10.
To see the top-ranked offers, check out WalletHub's picks for the best credit-builder loans.
6
Upvotes
Where can I get a credit builder loan?
Reply
6
Gino Rodriguez, Writer
@gino_rodriguez
You can get a credit builder loan from local banks, credit unions and online lenders. Credit builder loans are designed to help people who are looking to establish or improve their credit, but you are unlikely to find major banks offering them.
Where to Get a Credit Builder Loan
Lender | APRs | Loan Amounts | Payoff Periods |
... | 9% - 9.5% | $500 - $1,500 | 12, 18, or 24 months |
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16
Upvotes
Is a loan through Upstart a good idea?
Reply
16
1
Grace Enfield, Content Writer
@grace_enfield
A loan through Upstart is a good idea if you need to borrow $1,000 - $50,000 with funding as soon as the next day after approval and you have a low credit score or limited credit history. Also, you can use a personal loan through Upstart for almost anything, from debt consolidation to large purchases. Upstart is a good company because it partners with banks to offer large loan amounts, long repayment periods, and typically low APRs.
...
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11
Upvotes
Do you get money from a credit-builder loan?
Reply
11
Grace Enfield, Content Writer
@grace_enfield
You get the money from a credit-builder loan after the loan term ends and you've made all the payments, plus interest. Unlike with other loans, you will not be able to access any of the funds until the credit-builder loan is paid off. In other words, you're not actually borrowing money with a credit-builder loan.
If you're looking to get funds right away, you may want to consider getting a personal loan or a credit card. With...
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16
11
Upvotes
Do banks give loans to build credit?
Reply
11
Grace Enfield, Content Writer
@grace_enfield
Yes, you can find credit-builder loans at banks. Any loan you get from a bank can help you build credit if you make the payments on time, and some smaller banks offer credit-builder loans that are specifically designed to help people establish or re-build their credit.
Best Banks for Credit-Builder Loans
Republic Bank
Republic Bank's credit-builder loans offer $500 - $1,500, charge APRs of 9% - 9.5%, and need to be paid off within 12, 18, or 24 months. Your funds will...
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10
1
Upvote
Does a credit builder loan help credit score?
Reply
1
Gino Rodriguez, Writer
@gino_rodriguez
Yes, a credit builder loan helps your credit score, as long as you make the payments on time each month. When you get a credit builder loan, the amount you are borrowing gets put into a savings account, and you pay the lender in monthly installments then receive the funds when the loan is fully paid off. The lender will report your payments to the major credit bureaus every month, and if your payments are made on...
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11
Upvotes
Is a credit-builder loan a good idea?
Reply
11
Grace Enfield, Content Writer
@grace_enfield
A credit-builder loan is a good idea because you can easily improve your credit score by making on-time monthly payments. With a credit-builder loan, the lender will put money into a savings account for you, and you'll make payments to them over a set time. These payments will add up to the amount of money the lender put in the savings account, plus interest, and once you make all the payments, you'll get access to the...
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5
11
Upvotes
What is a credit-builder loan?
Reply
11
Grace Enfield, Content Writer
@grace_enfield
A credit-builder loan is an installment loan with fixed monthly payments for someone who wants to rebuild or establish their credit. When you take out a credit-builder loan, the lender puts money into a savings account for you, and you then repay that amount plus interest before receiving the savings account at the end.
During the life of the loan, the lender will report your payment history to the credit bureaus. If you pay on...
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13
11
Upvotes
How much can I borrow with a credit-builder loan?
Reply
11
Grace Enfield, Content Writer
@grace_enfield
You can get between $300 and $3,000 with a credit-builder loan. The main purpose of a credit-builder loan is to add on-time payments to your credit report, so the lender will put the money into a savings account for you, and you'll then have to repay the amount plus interest before getting the money.
To compare the top-ranked offers, check out WalletHub's picks for the best credit-builder loans.
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