Best Credit Builder Loans for 2025
Best Credit Builder Loans for 2025 View All Best Credit Builder Loans for 2025
- Top Picks
- CreditStrong
- Credit Karma
- Self
- See More (3)
- MoneyLion
- BMO
- Patelco Credit Union
- Why Trust Us
- How Does a Credit Builder Loan Work?
- Common Credit Builder Loan Terms to Understand
- Pros and Cons of Credit Builder Loans
- How to Get a Credit Builder Loan
- Methodology
CreditStrong is our choice for best credit builder loan provider. It offers long repayment terms and a variety of loan options. Other good choices include Credit Karma and Self. The best credit builder loans are affordable, with flexible terms and loan amounts, and payments are reported to all three credit bureaus.
A credit builder loan is different from a traditional loan. You won’t get the funds immediately when you apply for one. Instead, the lender will hold the money until you’ve paid it off, minus any fees or unpaid interest. Along the way, the lender will report your payments to the major credit bureaus, improving your credit history and score.
Investopedia’s research and editorial staff evaluated more than 300 data points to select the best provider for a credit builder loan. Learn more about our top pick and other lenders that may be good fits for you.
Best Credit Builder Loans for 2025
- Best Overall, Best for Long Repayment Terms: CreditStrong
- Most Affordable, Best for Small Loan Amounts: Credit Karma
- Best Online Experience: Self
- Highest Customer Satisfaction Rating: MoneyLion
- Best Big Bank: BMO
- Best Credit Union: Patelco Credit Union
Best Overall, Best for Long Repayment Terms : CreditStrong
- APR Range: 6.99%–15.61%
- Loan Amounts: $1,000–$10,000
- Loan Terms: 24–60 months
Why We Chose It
CreditStrong offers a variety of loan types, terms, and amounts, making it easier to build or rebuild your credit in a way that fits your budget and finances. The revolving credit option requires an annual fee, but the installment loan option only charges an origination fee (and interest) and avoids the annual administrative fee some lenders require.
Pros & Cons
Pros
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Offers both installment and revolving loans
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Reports to all three credit bureaus
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Flexible loan terms, from 24 to 60 months
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14-day grace period for late payments
Cons
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Charges an origination fee
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Revolving loan option requires an annual fee
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Not available in Vermont and Wisconsin
Overview
CreditStrong offers two ways to boost a credit score: an installment loan and a revolving credit loan (like a credit card). Each impacts different aspects of your credit score.
With the installment loan, you can choose terms from 24 to 60 months and amounts from $1,000 to $10,000. You’ll pay a one-time administrative fee and interest. Funds are held at CreditStrong’s parent, Austin Capital Bank. As you pay down the balance, the company reports your payments to the three major credit bureaus, improving your payment history, which is 35% of your credit score.
The revolving credit option requires no monthly payments and allows you to build $1,000 of revolving credit, improving your credit utilization ratio, which is worth 30% of a credit score. This option comes with a $99 annual fee.
CreditStrong is a division of Austin Capital Bank, which was established in 2006.
Additional Details
| Origination Fees | $15 to $25 |
|---|---|
| Credit Building Tools | Family identity protection, business credit building, monthly FICO score |
| Available Discounts | None |
Most Affordable, Best for Small Loan Amounts : Credit Karma
- APR Range: 0%
- Loan Amounts: $500–$1,000
- Loan Terms: N/A
Why We Chose It
With Credit Karma, you won’t pay origination or administrative fees or interest. Simply create an account and begin building your credit.
Pros & Cons
Pros
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No interest or fees
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Consumers can set monthly payments
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Helps with payment history and credit utilization
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Reports to all three credit bureaus
Cons
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Confusing loan structure
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Doesn’t disclose if loan cancellation is available
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May not be available with a credit score above 619
Overview
When you establish a Credit Builder account with Credit Karma, you’ll get a savings account and a revolving line of credit. With this combo, Credit Karma says you can begin boosting your credit score in as few as three days.
Here’s how it works: You’ll transfer whatever amount fits your budget (but at least $10) monthly from your line of credit to a Credit Karma savings account. When your monthly statement for your line of credit arrives, you repay your line of credit for the amount transferred. When your savings account hits $500, Credit Karma releases the funds to your Credit Karma Money spend account (which you’ll also need to open with Credit Karma). You can use those funds for whatever you like.
As you save, your line of credit increases, too, maxing out at $1,000. It’s complicated but can help improve credit utilization and payment history.
Unlike the other credit builder loans we evaluated, Credit Karma’s credit builder loan is entirely free to use. It doesn’t charge interest, administrative fees, or any other costs.
Credit Karma was founded in 2007 as a credit monitoring and education company. Intuit purchased Credit Karma in 2020, and it now offers additional services, like online banking, net worth tracking, tax filing, and a credit card and loans marketplace.
Additional Details
| Origination Fees | None |
|---|---|
| Credit Building Tools | Free credit reports, credit scores, and credit monitoring |
| Available Discounts | None |
Best Online Experience : Self
- APR Range: 15.51%–15.92%
- Loan Amounts: $600–$3,600
- Loan Terms: 24 months
Why We Chose It
Self offers a practical, straightforward approach to credit builder loans. It stood out in Investopedia’s research because of its user-friendly website and a wealth of online educational resources.
Pros & Cons
Pros
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User-friendly platform
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Variety of loan and payment amounts
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Access to credit building card after 3 months
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Reports to all three credit bureaus
Cons
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High minimum APR
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Charges an origination fee
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Only offers one loan term
Overview
When you start a credit builder loan program with Self, your funds will be held in a certificate of deposit (CD). Loan amounts range from $600 to $3,600, with monthly payments between $25 and $150. All loans have the same 24-month term.
Self reports your payments to all three credit bureaus as you repay the loan. At the end of the term, you’ll get your loan proceeds minus interest and fees.
If you make three months of on-time payments worth $100, you can open a Self Visa Credit Builder card. This is a secured credit card. It doesn’t require a credit check and uses the funds you have saved with Self as collateral. As you make more payments, the credit limit on your Self Visa card climbs, too. Once you have both, you should see improvement in both your payment history and credit utilization ratio, which are the two largest components of a credit score.
Self’s founder, James Garvey, wound up with damaged credit after an error with a credit card. He launched the company in 2015 to help people like him with poor credit or thin credit histories establish and build credit faster and easier. Self Financial is headquartered in Austin, Texas.
Additional Details
| Origination Fees | $9 |
|---|---|
| Credit Building Tools | Self Visa Credit Card, rent and bills reporting |
| Available Discounts | None |
Highest Customer Satisfaction Rating : MoneyLion
- APR Range: 5.99%–29.99%
- Loan Amounts: $500–$1,000
- Loan Terms: 12 months
Why We Chose It
Of the 12 companies we researched, MoneyLion has the highest customer satisfaction ratings. Its suite of credit building tools and perks also sets it apart.
Pros & Cons
Pros
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Excellent customer reviews
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Customers can quickly receive some proceeds in cash
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Reports to all three credit bureaus
Cons
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Requires a $19.99 monthly fee
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High maximum APR
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Only available in 42 states
Overview
With MoneyLion, you sign up for a membership with a credit-builder loan, educational resources, credit report monitoring, a rewards program, and some fee waivers for other services. You’re also signing up for a $19.99 monthly fee.
MoneyLion’s members seem to like the approach. On Trustpilot, it earns a 4.1 rating (out of 5). Investopedia’s researchers gave it a Combined Consumer Review rating of 4.3 (out of 5). This rating, developed by Investopedia, is an aggregate of consumer review ratings on two popular review sites: Trustpilot and the Better Business Bureau.
The credit builder loan itself is no frills. It’s a 12-month loan for up to $1,000. Your funds are held in an account that earns interest until you’ve paid it off.
While MoneyLion’s monthly fee is high, members can earn it back by using more of the company’s services, including an investment account, a checking account, and a credit card. You’ll also need to log in to the app regularly. If you do all that, you’ll earn enough rewards discounts to cover the monthly fee.
Note
The maximum discount you can earn is $19.99 (the minimum is $2). If you don’t meet the requirements to earn $19.99 in rewards, the resulting monthly fee may not be worth the benefits.
MoneyLion was founded in 2013 and is headquartered in New York City.
Additional Details
| Administrative Fees | $19.99 per month |
|---|---|
| Credit Building Tools | Credit monitoring, credit education |
| Available Discounts | Waived fees on MoneyLion Managed Investment and RoarMoney accounts |
Best Big Bank : BMO
- APR Range: 10.8%–19.12%
- Loan Amounts: $1,000–$5,000
- Loan Terms: 24–60 months
Why We Chose It
BMO Bank is the only traditional bank on our list. It features flexible loan terms and amounts, and you may earn some interest income while your loan funds sit in an interest-bearing CD.
Pros & Cons
Pros
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Flexible loan terms and amounts
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Earn interest in a CD
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1% rate discount with autopay
Cons
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Charges a $75 loan processing fee
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Relatively high APRs
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Subject to penalties for early CD withdrawals
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Must apply via telephone or in a branch
Overview
BMO’s credit builder loan parks your loan funds in a CD. You can choose amounts between $1,000 to $5,000 and terms from 24 to 60 months. As with most lenders we researched, BMO reports your payments to all three major credit bureaus. At the end of the term, the entire loan amount is released to you, plus interest earned from the CD. BMO’s CD rates vary, so your earnings may vary. The total interest you pay will most likely be greater than the interest you earn from the CD.
You can make your monthly payments via autopay from a BMO checking account. You’ll get a 1% interest rate discount if you choose autopay. Note that because your funds are invested in a CD, you’ll pay a CD early withdrawal penalty should you close the account early.
BMO (Bank of Montreal), established in 1817, is the eighth-largest bank in North America. It’s a full-service bank offering checking and savings accounts, credit cards, loans, investment services, and more.
Additional Details
| Origination Fees | $75 |
|---|---|
| Credit Building Tools | Free credit report and credit score, credit simulator, credit building tips |
| Available Discounts | 1% with autopay |
Best Credit Union : Patelco Credit Union
- APR Range: 5.5%–5.5%
- Loan Amounts: $500–$5,000
- Loan Terms: 6 months–36 months
Why We Chose It
Patelco’s ScoreUp Credit Builder Loan offers all of the perks you’d expect from a credit union, including competitive interest rates and no loan fees. It’s a great option for anyone who is a current Patelco member or eligible to become a member.
Pros & Cons
Pros
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Low APR
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No fees
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Flexible loan amounts and terms
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No negative impact for late payments
Cons
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Requires credit union membership to apply
Overview
Patelco Credit Union, Investopedia’s highest-ranked credit union for personal loans, is also our choice for credit builder loans. You can choose amounts between $500 and $5,000 with terms from three to 36 months. Interest rates are a flat 5.50%.
Once approved, your loan funds are deposited into a “ScoreUp” savings account. When the loan is repaid, you’ll get your funds minus interest.
One standout feature of Patelco’s credit builder loan program is payment assistance. If you can’t make your payment, Patelco won’t report it to the credit bureaus. Instead, you will have 25 days to make the payment, and if you can’t, Patelco will close your account. You’ll receive the amount you have paid on the loan up to that time, minus interest.
Patelco Credit Union, established in 1936, serves people in several northern California counties. It is headquartered in Dublin, California. You can join if you or a family member lives, works, or studies in one of those counties or by joining the Financial Fitness Association.
Additional Details
| Origination Fees | None |
|---|---|
| Credit Building Tools | None |
| Available Discounts | Not disclosed |