Best Credit Builder Loans | No Credit Check
By Noah Gomez
Published: 4 August 2024
Surprisingly, the majority of credit-builder loans run hard inquiries despite the obvious ideological conflict between helping consumers build credit and judging them based on it.
Based on our data, just over 50% of lenders run a hard inquiry, whereas another ~20% run soft inquiries and the remaining 30% run absolutely zero credit check.
But the plot thickens because most no-credit-check offers have caveats and fine print. For example, KeyPoint Credit Union only accepts borrowers with zero credit history (not those with damages on their report).
In this article, we sourced the 7 best no-check offers and explain for whom they're a best choice. We weeded out any offers with unreasonable constraints and instead focus on the honest, well-intentioned, and reputable lenders in the market. Anyone can find an option here without fear of denial. These are offers we usually recommend via the automated rebuilding program.
Comparative Summary of 7 Offers
#1 Pick
Ava
Best Low-Cost Option
Est. APR (%): 2
Avg. Principal ($): 252
Avg. Duration (mnths): 12
Credit Check: No Credit Check
Ava is an ideal option for anyone with zero credit history or small negative marks. It's principal goes as high as $2,400 and as low as $600 on a 24-month schedule and from $1,200 to $300 on a 12-month schedule, which provides a good deal of flexibility for most borrowers.
Additionally, Ava takes an aggressive stance on reporting speed. They are structured to show up within 7 days, with 74% of users seeing this success.
#2 Pick
Zing Credit Union
Best from Credit Union
Est. APR (%): 10
Avg. Principal: 750
Avg. Duration (mnths): 24
Credit Check: No Credit Check
Zing credit union is located in Colorado, but membership is unusually available nationwide because Zing partners with GoWest Foundation, which you can join for $5 and qualify for membership with Zing.
Zing's offer has an interest rate slightly higher than the national average (10% APR vs 7.78% APR nationwide), but it's average principal is a low yet healthy $750, which means the absolute cost of borrowing is lower than all other offers on the list with the exception of Ava above.
If you want to play with rates and amounts, consider some of the other options on our list.
#3 Pick
Kovo
Best for Low Effort
Est. APR (%):
Avg. Principal ($): 240
Avg. Duration (mnths): 24
Credit Check: No Credit Check
Kovo is arguably the strangest credit builder product on the market. Rather than require payments serve as collateral and pay out at the end of the loan, Kovo is simply a payment you make each month.
You don't get the money back, but the kicker is that it's extremely easy. Rather than worry about exchanging with a credit union, bank, or digital lender, you effectively "set it and forget it."
Counterintuitively, Kovo's total cost is lower than many other "traditional" credit builder loans because the principal is so low. Simply pay $10 per month for 24 months, and you build $240 in installment credit.
#4 Pick
Brigit
Best for Cash Advance Combo
Est. APR (%):
Avg. Principal ($): 600
Avg. Duration (mnths): 24
Credit Check: No Credit Check
Brigit is one of a few online lenders to offer zero interest loans in exchange for membership in a suite of benefits. This can appear deceptive on the surface because the loan appears to be free but is actually part of a bundle cost, which is $14.99 per month. Over the 24 month offer period, that comes out to $359.76.
The advantage of a bundle offer is obviously the added benefits, and in the case of Brigit, this is cash advance. You'll have an advance available based on your income. Additionally, you have access to any amount of savings your build with the credit builder loan at any time. So why not build some credit while saving?
#5 Pick
Navy Federal Credit Union
Best Fully-Secured Option
Est. APR (%): 2.75
Avg. Principal ($): 15025
Avg. Duration (mnths): 96
Credit Check: Hard Inquiry
Navy Federal is well known as a credit union for the U.S. Armed Forces active personnel and veterans, as well as public servants working for the Department of Defense (and any family members).
If you don't have a connection then this isn't the choice for you, but anyone who does should note that this is a fully-secured option. That means you need to have the full value of the loan in savings in advance. So in reality, it's best for those who are already members.
If you are, it's hard to beat ~5% interest. The key thing to remember with fully-secured credit-builders is that they are not good financing tools. You should only use an amount that can cover any negative account values you have on your credit report, or a small amount if you have zero credit history (though this isn't the best choice for those with zero history).
#6 Pick
Build (aka "GetBuild")
Best for Transparent Price & Principal
Est. APR (%): 15.81
Avg. Principal ($): 1092
Avg. Duration (mnths): 18
Credit Check: No Credit Check
Build is one of the "three B" credit builders along with Brigit and Bright, and its differentiating factor is transparency and range for principal and pricing (see picture below).
It's not uncommon for borrowers to be skeptical of lenders for the simple reason that loans are not intuitive products, but virtually everyone must use one at least once in life.
#7 Pick
Cheese
Best Digital Lender
Est. APR (%): 10.5
Avg. Principal ($): 1250
Avg. Duration (mnths): 18
Credit Check: No Credit Check
Cheese is our #1 pick for online lenders for a numbers of reasons, but the gist is that it's an inexpensive option with simple 12 — 24 terms and $500 — $2,000 principal amounts. Cancel anytime, and no prepayment penalties. Most customers with disappointing experiences are those who misunderstand the purpose of credit builder loans and how they work.
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, but consumers should keep in mind that favorable length and principal amounts often come at the cost of high interest.
Most
importantly, the deciding factor for options on this list is the absence of credit check. We pick options with the additional criteria of availability of the
loan in all 50 U.S. states. While not always possible, every option here is available in more than one state.
Counterintuitively, many so-called local
credit unions usually geographically limited by definition 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. 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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