Best 6 Month Credit Builder Loans
By Noah Gomez
Published: 31 July 2024
No national credit builder brands offer 6 month options, so you need to get creative to find one.
Six month credit builder loans are not unheard of, but it can be challenging to find these short-term options from an institution (usually credit unions) serving your area and not sacrificing low interest + reasonable principal amounts.
We spent 6 months compiling a database of offers and discovered two options available anywhere in the US (it requires a pro trick we'll explain). There are an additional 5 options on our list restricted to several major US states, so everyone can find what they're looking for below.
Comparative Summary of 7 Offers
#1 Pick
Self-Help Federal Credit Union
Best Overall for 6-Months
Est. APR (%): 4
Avg. Principal ($):
Avg. Duration (mnths): 15
Credit Check: Soft Inquiry
Cooperative Federal is the number 1 pick because it offers the lowest cost of any 6-month credit builder loan available nationwide.
Principal amounts start at $300, so if you want an even lower principal amount than the standard $500 minimum, you won't do better. They go as high as $2,000 as well, so you can match the value of negative marks (if any) on your report.
Though based out of Oregon, you can join the credit union by subscribing to Inclusive Economy CNY for $5 (one-time lifetime membership).
The only downside is that Cooperative Federal runs a hard inquiry on your report. It's highly unlikely you will be denied, and the impact of a hard inquiry is not severe (it happens with any normal card or loan), but it's worth noting. If you don't like hard inquiries, check out Self-Help below.
#2 Pick
Cooperative Federal Credit Union
Best for Nationwide Access
Est. APR (%): 3.95
Avg. Principal: 1150
Avg. Duration (mnths): 21
Credit Check: Hard Inquiry
Self-help comes in as a close second. It is the second least expensive 6 month credit builder loan
that's available nationwide. It's based in California, Illinois, and
Wisconsin, so residents can get it with a free membership.
If you're based outside these states, simply pay a one-time membership fee of $5. This will get you access to our #1 pick.
In
addition to a 6-month term, the offer allows principal amounts as low
as $500 and up to $2,000 so you can take an amount closest to the
amounts of any negative accounts on your report (or keep it small if you
simply have no credit history).
With 4% APR, Self-Help's offer
is decisively below the national average of 7.78%. You can expect
monthly payments of ~$106 over a 6-month period on $500 principal.
Moreover,
Self-Help only runs a soft inquiry, which means applying will not hurt
your credit. You have effectively nothing to lose except a negligible $5
membership fee if you're out-of-state.
#3 Pick
Stanley Credit Union
Best in Illinois, Indiana & Tennessee
Est. APR (%): 5.7
Avg. Principal ($): 1375
Avg. Duration (mnths): 15
Credit Check: No Credit Check
Stanley Credit Union is one of few 6-month offers available in multiple states (Illinois, Indiana & Tennessee), which is the primary reason we rank it #3. If you're not based in these states, check out the following offers (Pennsylvania, Texas, Mississippi & Michigan) or go with options 1 or 2 above.
If you took $750 in principal over six months, the monthly payment would come out to ~$129, and Stanley offers principal ranges from $250 to $2,500 for additional flexibility. We generally suggest borrowers match the value of any negative accounts on their report if any, and otherwise to consider $500 as a minimum if you just want to establish some installment history.
#4 Pick
Hershey Federal Credit Union
Lowest Interest (PA Only)
Est. APR (%): 2
Avg. Principal ($):
Avg. Duration (mnths): 9
Credit Check: Soft Inquiry
Hershey Federal is based in Pennsylvania, and it offers the lowest interest rate on our list at only 3.65%, as well as an average $500 in principal. If you're fortunate enough to live in Dauphin or Lebanon counties in PA, consider this option. Otherwise, try option 1 or 2 on our list.
#5 Pick
University Credit Union
Best in Texas
Est. APR (%): 3
Avg. Principal ($): 1500
Avg. Duration (mnths): 15
Credit Check: Hard Inquiry
In Texas, if you attend school at one of 20+ institutions (see offer page via button below), then you're eligible for the 6-month credit-builder at 5.67% interest and $1,500 in principal on average.
We think this option makes sense for students because they can use their membership to benefit from the full stack of credit union benefits rather than joining one just for the loan offer.
#6 Pick
Singing River Federal Credit Union
Best in Mississippi
Est. APR (%): 6
Avg. Principal ($): 750
Avg. Duration (mnths): 9
Credit Check: No Credit Check
In Mississippi, a lesser known credit union called Singing River proposes a ~10% interest offer for 6-months. Principal amounts range from $500 — $1,000, which is a healthy amount for most people. It is only available, however, in Jackson, George, and Greene counties, so if you're outside those areas you'll need to go after options 1 or 2 on our list.
#7 Pick
Vibe Credit Union
Best in Michigan
Est. APR (%): 5.99
Avg. Principal ($): 3000
Avg. Duration (mnths): 9
Credit Check: Hard Inquiry
Finally, Michigan's Vibe Credit Union offers principal amounts between $1,000 and $3,000, which is slightly higher than the average on our list. It also has slightly higher interest rates (11.30%), which represents 5.99% APR. That may seem high compared to others on the list, but it's still below the national average of 7.78%.
Evaluation Criteria
We base our selection on quantitative information collected and stored in a proprietary database, which represents the largest aggregation of credit builder loans in the world.
To
accommodate the largest number of consumers, we assume an optimal loan principal of minimum $500 and $1,000.
For most consumers, interest cost is the most important
decisional factor. This list has no conflicts
between low loan APR and 6 month durations.
Several offers are limited to small geographical areas because
their terms are legitimately above the average offer nationwide.
Counterintuitively,
many so-called local
credit unions are available nationwide through a system of non-profit
affiliation or belief alignment. It's important to keep this in mind as
you examine the options whose names may suggest geographical
restriction.
What is a credit builder loan?
Credit builders are personal loans that help consumers with little or no credit improve
their score by applying a combination of flexible eligibility criteria
and deferred principal distribution. Lenders include banks, credit
unions, and online lenders at an average principal of $3,283 and APR of 7.78%.
Read more here.
Are credit builder loans worth it?
They are worth it if you struggle to get normal personal loans, you have
damaged or zero credit history, or you simply have no installment
credit on your report. They cannot harm your score (as long as you pay on time), and good offers are less expensive than normal loans due to the use of savings-based collateral.
Critiques sometimes call them gimmicky, but
the reality is that they get around a common misconception: that your
credit depends on the amount you borrow. It does not. A small principal
loan, even with above-average interest, costs pennies compared to the
benefits you gain from having positive installment history on your
report.
Thick Credit is not a credit repair organization, a credit conseling agency, or a debtor education providor. It does not act on your behalf to communicate with credit reporting agencies or provide pre-bankruptcy credit counseling and pre-discharge debtor education for bankruptcy.
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