Credit Builder Loans | Acorn Finance (2024)

What is the minimum credit score needed for credit builder loans?

Credit builder loans are primarily targeted toward individuals with low credit scores or limited to no credit history. As a result, some credit-building loans do not have a specified minimum credit score requirement. The type of loan you use to build your credit can influence requirements as well. At Acorn Finance our network of top national lenders specialize in personal loans. Offers will be more likely to be returned for borrowers with fair, good, average, or excellent credit. Most lenders on the Acorn Finance platform have a credit score cutoff of 600 or above. If you are unable to qualify for a traditional loan to build credit, you may need to explore the avenue of an actual credit builder loan. Banks and credit unions can offer these types of loans, but credit score requirements can vary.

What is the fastest way to build credit?

Building or rebuilding your credit score can be a challenge, but it's definitely achievable with patience and time. The good news is that you can prove your responsibility as a borrower by making timely payments and keeping your credit utilization low. Consistency is crucial, so only borrow what you can afford to pay every month and stay within your budget! With dedication and some consistency, you’ll see that you can improve your credit score and achieve your financial goals.

How can I begin building credit?

Everyone has to start their credit journey somewhere, and getting a credit-building loan is a great way to get started on the path to smart financial choices. Aside from getting a credit builder loan, you can consider getting a cosigner with good credit or becoming an authorized user on someone else’s account. The goal is to show that you can be trusted with the financial responsibility of major accounts and loans.

To get a credit score, FICO requires at least one credit account that’s been open for at least six months. Once your new account is open that long, you can monitor your score and continue to build credit with on-time payments, responsible borrowing and staying current on your accounts.

What ways can you build credit?

If you’re ready to start building credit, here are a few suggested options:

  • Try a beginner or secured credit card: Some banks can offer credit cards made just for those with no credit. They can be either secured or unsecured, and your usage is reported each month to the credit bureaus. This can help you start to establish credit and allow you to upgrade to a better or larger account eventually.
  • Be added as an authorized user: If you have a family member who trusts you, you can see if they’ll add you to their account as an authorized user.
  • Pay your utility bills: If you pay your own bills, some companies can report your payments to the credit bureau, which will help you establish your credit.

How many points will a credit builder loan raise my credit score?

It is estimated that a credit builder loan could raise the average credit score of a person who has little to no previous credit history or debts by 60 points when compared to people with similar credit profiles who did not take out a credit-builder personal loan.

Do banks offer credit builder loans?

Yes, some banks may offer credit builder loans, however, they may be more common among smaller financial institutions like credit unions and community banks. There are some online lenders who may offer credit builder loans as well.

How does a credit builder loan work?

When you apply for a credit builder loan, the lender places that amount into a savings account for you. For example, you could apply for a $2,000 credit builder loan. You and the lender then determine a loan term and split the $2,000 into monthly payments. The lender may or may not charge interest on the loan, and if they do, they may keep a portion of the interest as payment for services or they may return all of the interest paid back to you once the loan term is complete. This detail can vary by lender, therefore it is extremely important you understand all the conditions of the credit builder loan before signing.
Let us say you take out a credit builder loan for $2,000 over 12-months with a 10% interest rate. Each month you can make the monthly payments of $183.33 to the lender, and at the end of the 12-month repayment period, you should have reached around $2,200. It is at this point that the lender may wire you the $2,200, or they may wire you a less amount no less than $2, 000 if part of the conditions of the credit builder loan is that the lender gets to keep a portion of the $200 of interest accumulated as a service fee. At the end of the 12-month period, you should have 12-months of successful and positive payment history that should have helped boost your credit score enough that you may be able to qualify for a different line of credit on your own.

Do you lose money with a credit builder loan?

Each lender is different and the terms and conditions of credit builder loans can vary. Some lenders may want to keep a portion of any interest paid on the credit builder loan as a payment for their services. Always check with the lender to understand what their credit builder loan program entails before signing onto one.

How long does it take to build credit with a credit builder loan?

Typically, it can take a minimum of 6-months of payment history and/or credit activity to establish enough history to impact your score. If you only have a small credit builder loan, you may not see much of a change but it should lay the path to qualify for other types of credit. Establishing a good credit score requires awareness and attention. No effort you make is worthless, so keep making good financial decisions and working on boosting your score.

Why choose Acorn Finance for credit builder loans?

When you work with Acorn Finance, you’re more than just a transaction. We believe in giving you a full picture of your credit and lending options, so you can make the right choice when it comes to getting a credit-building loan. By using our simple and secure platform, you can receive offers in seconds with no impact to your credit score. The opportunity to get prequalified quickly and without credit score impact can help you expedite your financial journey and build your credit.

Credit Builder Loans | Acorn Finance (2024)


What credit score do I need for a credit builder loan? ›

Credit-builder loans do not require good credit for approval. However, they do require that you have enough income to make payments. When applying, you might need to provide information on your employment history, income and balance in your checking or savings account.

Is a credit builder loan worth it? ›

If you make regular on-time monthly payments, credit-builder loans are a good opportunity to improve your credit scores. Higher credit scores mean you'll have a better chance of being approved to take on important future debt, such as mortgages and auto loans.

What credit score is needed for Acorn Finance? ›

At Acorn Finance, most of our lending partners have a credit score cutoff of 600 or better. To find out if you qualify, complete the form and check offers within 60 seconds or less.

What is the maximum amount of a credit builder loan? ›

Credit builder loans are small loans to build credit that have a term of six to 24 months, with amounts ranging from $300 to $1,000.

Do credit builder loans give you money upfront? ›

With a credit builder loan, you don't receive the money until after you've made all of your payments. A personal loan provides you with the money upfront, allowing you to use it immediately. A credit builder loan is specifically designed to help you establish or rebuild your credit history.

What is a good APR for a credit builder loan? ›

Compare the Best Credit Builder Loans
LoanAPR RangeLoan Terms
Credit Strong Best for Long Repayment Terms6.99%–15.61%2–5 years
Digital Federal Credit Union Best Credit Union5.0%1–2 years
MoneyLion Best for Small Loan Amounts5.99%–29.99%1 year
Self Best for Large Loan Amounts14.14%–15.58%2 years
1 more row

How long does it take to pay off a credit builder loan? ›

Credit-builder loans tend to have shorter repayment terms, ranging from 12 months to 36 months — although some lenders may offer up to 48 months. This is especially important since the shorter the repayment period, the higher your monthly payment will be.

What are the downsides of self credit builder? ›

Non-refundable fees: High APRs aside, Self requires an up-front $9 non-refundable processing fee. The Self Visa secured credit card also has a $25 annual fee. Bad customer service: Self has a high number of negative reviews, flagging poor customer service and trouble getting money back after the 24 months are up.

How much does a credit builder loan cost? ›

Credit-builder loans typically have APRs of 6% - 16%, and they usually last for 6 to 24 months. The lender will also report your payments to the credit bureaus monthly. If you make on-time payments, your credit score will increase.

What is the lowest credit score to get Finance? ›

Generally, the lower your credit score, the higher the annual percentage rate (APR). To get a reasonable interest rate, you need around a credit score of 660 or higher. If you have a poor credit score (in the 300–500 range) you may be able to have a co-borrower help with getting you approved for a car loan.

Can I get a loan with a 562 credit score? ›

Can I get a personal loan with an 562 credit score? To be sure, most personal lenders want to see a credit score significantly higher than a 562, so you may have a challenge finding a lender willing to approve you.

How much of a loan can I get with a 560 credit score? ›

You can borrow anywhere from a few thousand dollars to $100,000+ with a 560 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

Is it good to have multiple credit builder loans? ›

The Benefits of Opening Another Credit Builder Loan

If you only have a few accounts in your credit history you may have a “thin file,” which could limit your creditworthiness. Adding another credit builder account can help “fatten” your credit file.

What is the difference between a personal loan and a credit builder loan? ›

But it operates a bit differently from a traditional loan. While a traditional loan provides access to a lump sum of money right away, a credit-builder loan deposits the funds into an account and releases the money once you finish making all payments on the loan.

What is the best credit builder? ›

If you're interested in applying for a credit-builder loan, here are five to consider.
  • Best for low credit scores: Self.
  • Best for immediate access to money: MoneyLion.
  • Best for full-service banking: Digital Federal Credit Union.
  • Best for larger loan amounts: Credit Strong.
Mar 26, 2024

What is the average credit score for a construction loan? ›

Credit Score and Income Minimums

Additionally, don't make any large purchases in the months before you're going to apply for a construction loan. Most lenders typically want a minimal credit score of 680 for the loan to be considered, some want the score to be 720 or better.

Can I get a construction loan with a 650 credit score? ›

FHA construction loan requirements

To qualify for any FHA loan, you'll need to meet the following criteria, at minimum: Credit score: At least 580, or as low as 500 if putting down at least 10 percent. Debt-to-income (DTI) ratio: No more than 43 percent (with some exceptions)

Can I get a credit builder loan with no credit? ›

If you don't have any credit, our Credit Builder loans help you get started and slowly build your credit score. Our Second Chance Credit Rebuilder loans give you a chance to repair your low credit score.


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