Posted on Apr 9, 2024
Updated on Apr 9, 2024
The content is accurate at the time of publication and is subject to change.
If damaged credit has made it difficult for you to get a regular credit card, consider applying for a credit builder app. Credit builder apps can be a great tool for anyone who wants to improve their credit score. However, they are especially helpful for those who have a less than perfect credit score or who want to build a credit history from scratch. Each app has different features, but they all aim to help you get a better credit score.
Credit building apps can help you improve your credit history by offering free credit monitoring, a line of credit, or a credit building loan. Making timely payments and keeping your balances low will allow you to improve your credit score over time.
Types of credit building apps
Generally, you'll find the following types of credit building apps. Some apps offer free plans with the option to upgrade to a paid account at any time, while others charge a reasonable monthly or membership fee for their services. It's important to understand how they work and which one is best for you.
Credit builder loans
This type of app enables you to take out a small loan and pay it back to help you build credit. They are typically between $500 and $1,000, but some lenders let you take out a little more. The term of these loans usually ranges from 6 to 24 months. And as you make payments, the lender reports your on-time payments to the major credit bureaus, helping to increase your credit score. At the end of the payment period, you get your money back, minus any fees and interest. Self and Brigit, for example, offer credit building loans to their subscribers.
Credit builder lines of credit
Credit building lines of credit work by setting up a credit line to get access to educational resources such as e-books and e-courses on financial literacy, or to buy items from the company's online store for a reasonable membership fee. You repay the loan in small instalments, and the lender reports your payments to the credit reporting agencies. However, unlike a credit builder loan, you won't get your money back or a payout at the end. Kikoff and Kovo, as an example, provide affordable lines of credit that can help improve your credit score.
Credit-building apps that report your monthly subscriptions
Some credit builder apps let you build credit by paying everyday expenses, like subscriptions and utilities. This option works by automatically paying and adding to your credit report additional bills such as cell phone, streaming services, and utilities. You probably use subscriptions like Netflix, Hulu, or Spotify, so subscription service payments can help improve your credit by increasing the number of on-time payments included in your report. For example, you can use Grow Credit to pay for any of your subscriptions.
Credit building secured credit card
Building credit can be tough, especially when you don't have any credit to begin with. This is where secured credit cards can really help you build credit and good credit habits. You can use your card to make purchases and payments as usual, but the main difference is that secured cards will require you to provide a cash security deposit, usually equal to your credit line. At the end of each month, it will report your account activity to the credit bureaus. And this way, you can gradually build up your credit history. For instance, the Chime Secured Credit Builder Visa® Credit Card makes it easy to stick to a budget and pay your credit card bills on time.
Credit monitoring apps
Your credit score shows lenders how trustworthy you are as a borrower. So having a good credit score is the only way to get the best terms on your loans and pay less over the life of your loans. All credit bureaus offer apps of this kind. They won't improve your score directly, but they can help you keep track of your current credit score and provide you with useful credit building recommendations. They may also alert you to newly opened accounts, hard credit inquiries and public records like bankruptcies or lawsuits. Apps to help you keep a close eye on your credit score include Experian Boost™, Credit Sesame, MyFICO and others.
Here are our top picks for the best credit builder apps from our partners:
our choice
Maximum Loan Amount
$750
Minimum Loan Amount
See terms
Minimum Income Required
See terms
Minimum Age of a Borrower
18
- No credit check
- 0% APR and No hidden fees
- Open your account in minutes
- Bank-level security keeps your data safe
- A $750 revolving line of credit to use for Kikoff purchases
- Build payment history that gets reported to Equifax and Experian
our choice
Instant Response
Reporting to the Major Consumer Reporting Agencies
No Credit Check
No Checking Account Required
our choice
Regular APR
0%
Annual Fee
$0
Build Credit
Yes
- To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.
- Chime® Checking Account and $200 qualifying direct deposit required to apply.
- No annual fees or interest.3
- No credit check to apply.
- No minimum security deposit required.1
- Whether it’s gas or groceries, all purchases can count towards building credit with on-time payment.
- Reports to all 3 major credit bureaus.
- View and track your FICO® Score2 right in the Chime app. FICO is the credit score used by 90% of lenders.
- The secured Chime Credit Builder Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your card for its issuing bank.
- 1Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month.
- 2Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn More
- 3Out-of-network ATM withdrawal and OTC advance fees may apply. View the Bancorp agreement or Stride agreemen for details; see back of card for issuer.
our choice
Annual Fee: $0
Foreign Transaction Fee: 0%
Use this card everywhere Visa cards are accepted
our choice
Maximum Loan Amount
See terms
Minimum Loan Amount
See terms
Minimum Income Required
See terms
Minimum Age of a Borrower
18
- Build credit & Earn rewards.
- Payment performance is reported monthly to TransUnion, Equifax, Experian, and Innovis.
- Track your credit score every month.
- Learn with courses and pick up useful skills.
- Earn 1% back on loan offers. Up to $1,225.
- 0% APR / $0 fees. Instant approval. No credit check.
our choice
Instant Response
Reporting to the Major Consumer Reporting Agencies
No Credit Check
No Checking Account Required
our choice
Maximum Loan Amount
See terms
Minimum Loan Amount
See terms
Minimum Income Required
See terms
Minimum Age of a Borrower
18
- Choose a plan to build credit and savings at the same time!
- Start with a Credit Builder Account that reports monthly payments to all 3 major credit bureaus*.
- Sample loans: $25/mo, 24 mos, $9 admin fee, 15.92% APR; $35/mo, 24 mos, $9 admin fee, 15.97% APR; $48/mo, 24 mos, $9 admin fee, 15.72% APR; $150/mo, 24 mos, $9 admin fee, 15.88% APR. See self.inc/pricing
our choice
Reporting to the Major Consumer Reporting Agencies
No Employment Required
our choice
Maximum Loan Amount
$250
Minimum Loan Amount
See terms
Minimum Income Required
See terms
Minimum Age of a Borrower
18
- Get up to $250 quickly.277 $comm_277 = "yes"; ?>
- Start building your credit today.278 $comm_278 = "yes"; ?>
- It only takes 2 minutes.
- Stay on top of your credit and identity.
- No credit check required. No interest.279 $comm_279 = "yes"; ?>
- Real-time alerts.
our choice
Reporting to the Major Consumer Reporting Agencies
No Credit Check
Loans up to $250
Pros & cons of credit-building products
It's generally quite easy to sign up for the app. They won't affect your credit score, and what's more, there are options that don't require a security deposit. You can access a free credit card that comes with a credit builder account for convenience.
While the eligibility criteria for credit building products are less strict than for traditional loans and credit cards, interest rates are often higher because the lender carries more risk. So make sure you will be able to make monthly payments before you apply.
Credit builder apps usually offer affordable plans that anyone can get started with and that provide different tiers of features. The app shows you the negative and positive factors affecting your scores, allowing you to see issues so you can correct them and improve your credit score.
The basis of credit building products is fixed monthly payments towards a small loan or credit account. These monthly payments are reported to the major credit bureaus and reflect positively on your credit reports, gradually increasing or improving your credit score. This process is very important because it creates a record of consistent and responsible financial behavior.
