Credit Building Curve

Author: Noah Gomez

Published: 21 November 2023

The credit building curve (CBCv) is a consumer credit management technique in which borrowers use low-cost building products to improve their profile until the benefits of mainstream loans & card outweigh the costs. It minimizing the total cost of borrowing today and in the future.

credit building curve

The credit building curve is not the same as the snowball method, which is a debt payoff approach unrelated to credit building. It's also not the same as the avalanche method, which is another debt payoff strategy unrelated to credit.


  • The curve is a strategic approach to building credit.
  • It leverages special products designed for building.
  • It generally take 6 months.
  • It is not appropriate for those with strong profiles.
  • Paying off debts is a prerequisite.
  • There are no legitimate alternatives, except for postponing action.

Definition (Formal)

The credit building curve is a visualisable approach to building credit that focuses on actively influencing one's credit profile with the use of appropriate cards and loans at key points over time.

Key Takeaway for Consumers

More simply, the credit building curve is a strategic credit improvement methodology. It minimizes short-term costs of borrowing and optimizes profiles for future financing needs by acquiring credit building products until the benefits of mainstream loans & cards outweighs their costs.

How does the credit building curve work?

The credit builder curve works by leveraging strategic loans & cards. These products are tailored to the borrower's profile to minimize interest rates while maximizing odds of approval and debt amounts. The downside is that they usually do not offer rewards and rarely fund an expense or asset purchase.

Over time, strong monthly management creates thick, reliable profiles that persuade lenders to provide low rates on mainstream cards and loans used for rewards and funding.

Most credit-building products are designed for this purpose, but some conventional products double as building tools. For example, the Petal card is a classic credit card that also meets the criteria of credit builder cards.

How the Credit Building Curve Minimizes Costs

The credit builder curve minimize costs in two ways, at two different time. First, it eliminates supplementary costs paid on interest and high origination fees when consumer credit ranges from zero → good. These are immediate savings.

Second, the profiles they create not only meet minimum requirements for approval but also project a mature blend of installment and revolving debt.

Lenders rely on numeric models such as FICO, but they known scores can be deceptive. A well-rounded profile behind the score encourages lenders and insurers to offer lower rates. After all, they want borrowers who know what they're doing.


Imagine a 25-year-old borrower $50,000 active student loans and one credit card with a single 60-day late payment.

She would like to get rewards card for groceries (her largest expense) and to buy a house within 2 years. Last week a card issuer denied her, and she found high mortgage rates through an online simulator.

Our borrower decides on a no-check credit builder loan to diversify her debt types, and decides on a credit builder card to avoid the deposit on secured credit cards.

Her score drops at first, then after 3 months her profile recovers. She continues with good monthly management techniques and is careful to avoid common mistakes like using multiple cards each month.

Three months later (6 months total), her profile improves and she receives the high-reward grocery card. Another 2 months later, she tests her estimated mortgage rate drops 1.5% (equivalent to $100,000+).

Who should use the credit building curve?

The CBCv is more an approach than a thing to be used, but it has a specific audience. Most importantly, it's not the right choice for consumers with excellent credit. The rewards on offers available to these profiles are simply too compelling — they have already moved through the curve or bypassed it.

For example, excellent credit borrowers can obtain credit cards with 10%+ cash back, miles rewards, and store cards with cumulative benefits. They get the lowest rates on auto and mortgage loans, and even access revolving lines of credit direct from banks.

The curve is most relevant for borrowers with thin files, defined as files with 6 or fewer active loans and cards, especially if some of those accounts have negative marks such as late payments, charge-offs, and/or collections.

When should you use the credit building curve?

There is no advantage to postponing use of the credit building curve, except when borrowers have unpaid debts. Unsettled accounts like collections signal continued refusal to recognize one's debts, and lenders understandably shy away from these situations.

Otherwise, the best time to start is as soon as possible. A big chunk of consumer credit (15%) is how long accounts are open. Plus, opening a new account automatically hurts credit profile because lenders assume any request for debt is risky.

Together, this dynamic means the earlier borrowers start building, the sooner they have reliable results. We call this delay the "credit building wave," demonstrated in the image below.


How long does it take?

The average time to effect for credit building is generally considered to be 6 months, which aligns with our experience and with evidence from credit builder loans. This timeline represents the delay for reliable results, but it is an average and each individual profile's results vary based on their thickness.

For example, borrowers with a mix of 7 installment and revolving accounts and derogatory marks like missed payments have what's called thick damaged profiles. The effort required to dilute the impact of negative marks can be thought of like a scale.

Borrowers must balance out negative with positive. They must show positive use on an equivalent number accounts, with equivalent amounts, to show that past mistakes are not representative of present creditworthiness.

On the other hand, borrowers with zero or a small number of accounts can see results within 2 — 4 weeks. It is always easier to move upward towards the average than upward away from the average.

How to Use the Credit Building Curve

The credit building curve is not a novel concept, and most people follow it without realizing. At it's core, the curve is about choosing the right products, at the right time, in the right amount.

The more challenging element is knowing how to use each product on a monthly basis. Credit building is extremely sensitive nuance, and small mistakes can have big consequences.

For example, it's easy to choose a bank or credit union out of familiarity, but not all institutions report to all three credit bureaus (TransUnion, Experian, & Equifax). The result is that consumers may acquire a credit builder loan, only to discover after 12 months that it did not report to their mortgage lender.

Consumers can lean on professionals for help, or use guided DIY plans.

Key Benefits

The core benefit of using the credit building curve is cost savings. Credit building is a process over time, and timing is everything.

After a few months, during which there is a temptation zone. The temptation zone refers to a period of time in which consumers have access to mainstream brands, but at high rates.

Using the curve provides two critical advantages. First, it arms consumers against seductive marketing from major card and banking institutions.

Second, it provides a framework for execution that illuminates an otherwise dark path riddled with financial booby traps.


The disadvantage of credit building is that it isn't free. Consumers either pay for it the knowledge with time invested in research plus trial and error, or they pay for professional help.

Many consider this a fundamental disadvantage of the credit space itself, since it is a topic that consumers should in principal be able to do themselves.

Another potential disadvantage is that in rare instances it can be to the borrower's advantage to take a high rate products.

For example, borrowers refused for debt consolidation loans can alternatively use a promotional APR on balance transfers to delay impending debt payments.


There are few alternatives to effective credit building. Outside following the natural evolution of the curve without making mistakes (i.e. missing payments). Other options always end up costing more, and in some cases they can generate more problems.

For example, borrowers often acquire store cards with annual fees because they are more accessible. The issue with annual fees is that the exist forever, and if borrowers cancel the cards, their credit drops because they decrease the average age of all accounts.


Borrowers who aren't comfortable with the credit building process can lean on professionals to leverage the advantages of veteran knowledge during the length of the curve, or turn to guided DIY plans if they prefer to maintain control of the process like ThickCredit.

Nice to Know, Thanks

Credit is boring.
It only matters when we want

  • cars
  • homes
  • biz loans
  • credit cards
  • etc.

If you want this stuff, why wait?
It's not rocket science, you just need a guide.

About the Author

Noah Gomez (founder of Thick Credit) is a transatlantic professional and entrepreneur with 3+ years experience in consumer finance education. He also has 5+ years of experience in corporate finance, including debt financing, M&A, listing preparation, US GAAP and IFRS.

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