All terms
Glossary

Credit Builder Loan

A small loan where payments are reported to bureaus while the loan principal stays in a savings account until paid off.

A credit builder loan is a savings-account-locked installment loan designed to establish credit history. The borrower makes monthly payments to a held principal (often $500-$2,000) over 6-24 months; payments are reported to credit bureaus, building positive payment history. Once the loan is paid off, the consumer receives the principal back.

Best for: consumers with no credit history or a thin file. Recommended providers: Self, Kikoff, MoneyLion. Pair with a secured credit card for faster credit-mix benefits.

Related terms

Secured Credit Card

A credit card backed by a cash deposit. Used to build or rebuild credit.

FICO Score

The credit score model developed by Fair Isaac Corporation. Used by 90%+ of U.S. lenders.

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