Credit Builder Loan Eligibility Requirements

Published: 28 August 2023
Updated: 31 January 2024

Author: Noah Gomez

Credit-builders are flexible loans that use several structural techniques to accept borrowers with limited or damaged credit. Part of their flexibility comes from eligibility requirements, which include U.S. citizenship, employment, income, and credit history.

Each lender chooses its own acceptance criteria, so it's a good idea to shop around until you find the right match.

credit builder loan requirements include credit history, administration, financial stability, geography, account opening, and membership

CBL requirements fall into five (5) categories:

  1. Credit history, including report and score.
  2. Administrative requirements, which refer to biographical requirements such as nationality.
  3. Financial stability, such as steady income.
  4. Geography, because some lenders serve specific regions.
  5. Account requirements, including opening an account with the lender.
  6. Membership in the lender's organization.

Credit builder loan requirements are not the same as lender best practices, which refer to transparency, fairness, and trustworthiness standards lenders should meet.

Americans over 18 can generally find compatible credit builder loans, although those with subprime credit may need to open an account or forego upfront loan distribution for 6 to 12 months.


  • ~30% of CBLs have zero credit requirements
  • ~10% only run soft inquiries
  • Savings-based collateral is required for 2 of 3 CBL types
  • Adult age (usually 18), social security number, and legal residency/citizenship are administrative prerequisites
  • Stable employment and income as well as ≤35% debt-to-income ratio are requirements for many lenders
  • Location is a requirement for ~90% of lenders, who serve specific regions
  • Lenders may require opening a checking or savings account before borrowing or distribution
  • Membership is required for some lenders

Can you be denied for a credit builder loan?

Yes, it's possible to be denied for credit builder loan, but most lenders only turn away borrowers for administrative reasons such as missing social security numbers or because the person is not a member of the organization.

Some lenders can deny you due to poor credit, but it's uncommon. These are generally untrustworthy institutions using the "credit builder" namesake to generate business without understanding its purpose.

We weed out any shady banks and credit unions in our building programs.

What do you need to get a credit builder loan?

At a minimum, you need legal residency or U.S. citizenship, a social security affiliation, and willingness to share your age for most lenders. These are the standard, minimum requirements to get your foot in the door, though some lenders require proof of employment or other information.

Do you need a deposit for a credit builder loan?

Some credit builder loans require an upfront deposit, but they are a minority. The standard loans simply requires you to make payments into a savings account that you get back once the loan is paid-off or cancelled.

Credit History

Approximately 30% of credit builder loans have no credit requirements, which means these lenders don't check borrower credit. Another 10% of lenders use informal credit checks, called soft inquiries, that reveal limited information¹.

These percentage varies by type of credit builder loan. About 25% of payment-secured CBL lenders don't check credit. The figure drops to 23% for unsecured structures and jumps to almost 100% for fully-secured CBLs¹.

The remaining ~60% of CBL lenders check credit but do not require strong history. They leverage savings-based collateral and alternative creditworthiness metrics to offset risk from limited, zero, and damaged credit reports.

In other words, credit is not a decisive eligibility criterion for credit builder loans.


Secured credit builder loans distribute the loan amount at the of the term and require the borrower either deposit the full amount upfront or make monthly payments into a secured account.

That account acts as collateral for the loan and is a requirement consumers must accept. Unsecured CBLs do not require collateral.

Administrative Requirements

Credit builder loan lenders require borrowers disclose their legal residency or citizenshipsocial security affiliation, and age. They cannot discriminate on the basis of national origin, but they have the right to refuse undocumented immigrants who don't have social security numbers.

Social security numbers are also a requirement for many lenders because they help ensure the borrower is the person they claim to be.

Age is also a decisive factor. Lenders cannot discriminate on the basis of age, but they can refuse consumers who are not of adult age in their state (18 everywhere except Nebraska and Alabama where it is 19 and in Mississippi where it is 21).

Financial Stability

CBL lenders leverage alternative creditworthiness metrics in addition to collateral, and these metrics focus on financial stability rather than historical borrowing behavior (the focus of credit reports).

Lenders often require consistent employment with the same organization for 6 to 12 months, proof of regular cash deposits into borrower checking accounts, and living expenses below a predefined percent of income.

Approximately 10% of unsecured CBL lenders also require no bankruptcies in the preceding 12 months and fewer than 6 hard inquiries in the preceding 6 months for 10% of lenders¹.

Above all, CBL lenders look at debt-to-income (DTI) ratio, which measures the relative amount of existing debt to income. Lenders usually prefer DTI of 35% or less.


Approximately 90% of CBL lenders serve specific regions and not the entire U.S. continental territories. Some lenders like First Choice Credit Union serve a single county, and others serve 40+ states¹.

The eligibility requirements associated with these 90% of lenders are residency, work, study, or familial relationship with a person meeting one of the first three criteria.

Account Requirement

Many CBLs require borrowers create a savings or checking account with the lender to service the loan. Borrowers must in these cases create an account.

Credit unions are a prominent example, but all types of lenders can impose account creation. For example, Loqbox is an online CBL lender that requires borrowers open an account to receive loan proceeds or pay a $40 fee to use an existing account.


Lenders may require borrowers become paid members in their organization in order to borrow a credit builder loan. Credit unions are the most prominent example, but online providers such as MoneyLion also require membership.

Membership represents additional expense that's not included in APR or the loan agreement, so consumers should evaluate the total cost of borrowing before borrowing from a lender with membership requirements.


  1. Gomez, Noah. 2023. Review of Credit Builder Loan Offers Dataset. Thick Credit. July 24, 2023.

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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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