Best Credit Builder Loans Nationwide
By Noah Gomez
Published: 13 July 2024
The best credit builder loan could be at a credit union on your street. Then again, it could be across the country. A select few compete at the national stage, yet fly under the radar. Based on your cash, location, & credit profile, the "big" national offers may not be the right choice.
This article uses our database to identify credit builders with the lowest APR and standard 12 month, $1,000 offers — or those closest to it. Consumers looking for specific criteria such as 6 month offers or those from banks will also find offers we've hand-selected.
Comparative Summary of 7 Offers
#1 Pick
Vermont State Employees Credit Union
Best Overall
Est. APR (%): 3
Avg. Principal ($): 650
Avg. Duration (mnths): 12
Credit Check: Soft Inquiry
Nationwide, VSECU's credit builder has the lowest cost (interest and other fees). Don't worry if you're not based in Vermont. The credit union accepts anyone with a $8 yearly subscription to the Financial Fitness Association non-profit, and you only need $5 in a savings account to maintain eligibility.
Some digital lenders offer "0% interest" loans at low principal and instead charge monthly memberships that end up more expensive. They're easier to start, but often lack flexibility on principal amounts, whereas VSECU proposes sums from $300 to $1,000. Additionally, this CBL is available over the standard 12 month term, which is ideal for almost all borrowers.
#2 Pick
Cooperative Federal Credit Union
Best 6-Month Offer
Est. APR (%): 3.95
Avg. Principal: 1150
Avg. Duration (mnths): 21
Credit Check: Hard Inquiry
Cooperative Federal's credit builder isn't far behind VSECU's with an APR of 3.95%, which is also significantly lower than the 7.78% national average. This 6-month offer is ideal for someone who's decided on a short-term credit builder for a small installment bump.
Don't worry if you're not from Oregon. You can join the credit union by subscribing to Inclusive Economy CNY for $5 (one-time lifetime membership).
#3 Pick
Digital Federal Credit Union
Best $500 Offer
Est. APR (%): 5
Avg. Principal ($): 1750
Avg. Duration (mnths): 18
Credit Check: Hard Inquiry
DCU's offer has been prominent for some time, largely due to the credit union's history and connections. Though old, the credit union has put digital first with quality online and app interfaces + great customer service.
It proposes $500 in principal ($3k max) over a flexible 12 — 24 month period and charges 5% APR, more than 2% below the national average.
If you're not from Massachusetts, you can gain membership eligibility through a $10 yearly membership to Reach Out for Schools, and maintain $5 minimum on deposit at the credit union.
#4 Pick
Hope Credit Union
Best $1,000 Offer
Est. APR (%): 13.25
Avg. Principal ($): 1000
Avg. Duration (mnths): 12
Credit Check: Hard Inquiry
At 13.25% APR, Hope's credit builder is higher than the national average. The reason we include it here is because it's available in every state, whereas most "highly competitive" APRs are just local credit unions.
It's one of the better $1,000-only credit unions because the standard 12-month term makes it easy to plan for. Though LA based, Hope's only eligibility criteria is believing in its mission and a $10 membership fee (half of which goes to charity).
#5 Pick
Zing Credit Union
Best for No Credit Check
Est. APR (%): 10
Avg. Principal ($): 750
Avg. Duration (mnths): 24
Credit Check: No Credit Check
Zing's offer is another example of a credit union expanding its reach to the national stage. At 10% APR, it's relatively competitive for a $500 — $1,000 principal loan over 24 months.
The interface and customer service are strong, which is likely a result of Zing's connection to Partner Colorado credit union.
#6 Pick
BMO Bank
Best from a Bank
Est. APR (%): 12.24
Avg. Principal ($): 1000
Avg. Duration (mnths): 42
Credit Check: Hard Inquiry
BMO is one of very few banks to offer a credit builder loan. For those more comfortable with a traditional institution, BMO offers a competitive 12.24% APR loan on a standard $1,000 over flexible 24 - 60 months (5 year) periods.
We think you're better off going with a credit union, but for those attached to the traditional bank institution, BMO is our top choice.
#7 Pick
CreditStrong
Best Online Credit Builder Loan
Est. APR (%): 15.62
Avg. Principal ($): 1050
Avg. Duration (mnths): 42
Credit Check: Soft Inquiry
There are a number of digital lenders for credit builder loans, with Self carrying arguably the leading position in consumers' minds. While the competition changes regularly, CreditStrong's suite of products, and most notably its Instal product offer the most competitive rates in the market right now.
Another point to consider is customer service. Some digital lenders believe the platform does not need customer service because it is self-sufficient. In many cases this works, but the risk is too big when the topic is your credit.
CreditStrong Instal offers competitive customer service, as long as you understand how a credit builder loan works.
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 duration as any term between 6 and 24 months. Additionally, we assume an optimal loan principal between $500 and $3,000, with the most desirable quantity as $1,000.
Exceptions to these ranges are made for the most important loan variable: interest. This list has no conflicts between low loan APR and ideal principal + duration ranges, with the exception of BMO bank and CreditStrong. These are included to accommodate borrowers looking for bank and online lenders.
Most importantly, the deciding factor for this is the availability of the loan in all 50 U.S. states. Counterintuitively, many so-called local credit unions are available nationwide through a system of non-profit affiliation or belief alignment.
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.
Critiques sometimes call them gimicky, 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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