Credit Builder Loan Length — How Long They Last

Published: 12 September 2023
Updated: 1 February 2024

Author: Noah Gomez

Based on data of over 200 lenders, credit builder loans (CBLs) have an average length of 24 months, with a range of 1 to 180 months on select offers. The most common duration is 12, followed by 24 and 6 months¹.

the average credit builder loan length is 24 months

CBL length is not the same as time for results, which is the delay between loan start and credit growth that occurs between 1 and 18 months (as shown by hallmark studies by the NBER and CFPB and lender publications²³).

Length differs by CBL type. Payment-secured CBLs tend to coincide with the overall average, but fully-secured and unsecured CBLs have a wider range of possibilities.

Borrowers control secured CBL lengths more than traditional loans because of penalty-free payoff and cancellation. This means consumers can shorten the duration of the loan with few financial constraints.

However, longer CBLs provide greater benefit to credit profile because they create more positive payment history and allow more time to accumulate on an open installment account.


  • 24 months is the average credit-builder loan length
  • 12, 24, and 6 months are the most common durations
  • Longer durations add more payment history and therefore have stronger results
  • Early payoff or cancellation limits duration, and therefore results

Average for All CBLs

The average length of credit builder loans is 24 months. DreamSpring, Southwest Financial Credit Union, and Credit Union West offer 1-month options, and Navy Federal Credit Union offers 180-months, but they are exceptions to the norm.

The most common length is 12 months, which represents 42% of all durations offered. Terms of 24 months are the second most common, representing approximately 21% of offers. Terms of 6 months are third, available on about 13% of CBLs¹.

The remaining 24% (appx.) have lengths between 8 and 132 months.

Payment-Secured CBLs

Payment-secured CBLs (PSCBLs) have an average length of 22 months. Magnum by CreditStrong offers a 120 month option, and Credit Union West offers 1-month, but they are the only lenders with those lengths.

The most common durations are 12 and 24, which represent 41% and 29% of total offers, respectively. The remaining 31% (apprx.) range from 36 to 60 months.

Fully-Secured CBLs

Fully-secured CBLs (FSCBLs) have an average length of 72 months. Navy Federal Credit Union's option goes as high as 180, but it is an exception to the norm. Every FSCBL in our database proposes a 12-month length, which represents 50% of all possibilities.

Unsecured CBLs

Unsecured CBLs have an average length of 20 months. Upgrade offers terms as long as 84, but this is exceptional.

The most common length is 12 months, which represents 37% of offers. The second most common is 6, representing 17% of total options. Finally, 60-month USCBL lengths represent 10% of the total.

How Long to See Results

Studies by the National Bureau of Economic Research and the Consumer Financial Protection Bureau, as well as disclosures from 5 credit builder loan lenders, suggest results can appear as quickly as one week²³.

Results grow dramatically in the first 6 months, continue steadily through 12 months, after which they grow incrementally through 18 months¹. The plateau associated with 12 - 18 months is primarily due to missed payments from members of these studies.

Early Payoff

Many CBL lenders offer early payoff, and most do not charge prepayment penalty. This means borrowers can modify credit builder loan length with no financial blow-back.

Early Cancellation

In addition to zero-penalty prepayment, many CBLs offer cancellation, so borrowers can end the loan without paying it off in full. The lender simply pays out the current balance of the savings account.

Early cancellation can provide peace of mind to consumers with uncertain cash constraints.

Length has Direct Impact on Results

While early payoff and early cancellation are convenient, they can limit CBL benefit to credit. Credit builder loans improve credit primarily by creating payment history.

Each on-time payment is a positive mark, which means longer CBLs that accumulate more on-time payments have a greater total impact on credit.

Ending a CBL before its scheduled date limits its potential credit benefit, even if there are no penalty fees. That said, there are some circumstances under which shorter lengths are beneficial.

Pros & Cons Short Duration CBLs (≤12 months)

Short CBLs (≤ 12 months) are attractive to consumers because they project the image of credit improvement faster than alternatives. There are additional pros and some cons.


  • Planning. The core benefit of short term CBLs is planning. It is easier to plan for expenses over short durations, especially for borrowers with tight budgets and limited income.
  • More affordable. A short loan costs less than a longer loan with the same amount and APR. This occurs because interest is calculated on the outstanding balance monthly. Fewer monthly periods mean less interest.
  • Options. Approximately 80% of lenders offer CBLs of 12 months or less, making them one of the most popular options in the market.
  • Lower chance of missed payments. Short CBLs create fewer opportunities for missed payments, simply because there are fewer payments to make.


  • Less credit improvement. Short CBLs create fewer monthly positive payments, which means they do less to establish trustworthiness and credibility in the eyes of lenders, which is reflected in credit report and score.
  • Fewer lender types. Almost 79% of short length CBLs are from credit unions with geographic limitations. This means borrowers may have to look local and forfeit superior terms.
    • There is a way to access some credit unions regardless of location, and there are a handful of banks and online lenders providing short CBLs. This is something identified in builder packages.
  • Lower limits. Short CBLs have lower limits, with an average of $1,973. Borrowers with derogatory account larger than this will benefit less from amounts lower than their negative accounts.
  • Hard to get cash upfront. Unsecured CBLs provide cash upfront, unlike secured CBLs, but only about 10% of them are available under 12 months.

Pros & Cons Long CBLs (>12 months)

Long CBLs (>12 months) are attractive to consumers with large derogatory accounts on their credit report because they create more payment history. That's one of several pros, and consumer should heed disadvantages as well.


  • More payment history. More on-time payments equal better payment history, which represents 35% of major credit scoring models like FICO. Longer CBLs establish more monthly payments that will have a greater positive impact on credit profile.
  • Larger Amounts. Long CBLs have higher amounts, which benefits borrowers with significant derogatory accounts. As a general principle, borrowers should match or exceed negative account amounts to counterbalance the impact within reason.
  • More lender types. 25% of long CBL lenders are banks and online lenders, which provide winder geographical availability, better interface, and superior customer support.


  • Fewer options. Approximately 57% of lenders offer long CBLs, which means there are fewer available than short CBLs.
  • More expensive. Not only are APRs higher on long CBLs, but the larger number of periods leads to more absolute interest.
  • Missed payment risk. Longer CBLs provide more opportunities to miss a payment simply because there are more periods. This is entirely within the control of the borrower, however, and not an independent disadvantage.


  1. Gomez, Noah. 2023. Review of Credit Builder Loan Offers Dataset. Thick Credit. July 24, 2023.
  2. Burke, Jeremy, Julian Jamison, Dean Karlan, Kata Mihaly, and Jonathan Zinman. 2019. Credit Building or Credit Crumbling? A Credit Builder Loan’s Effects on Consumer Behavior, Credit Scores and Their Predictive Power,” July.
  3. “Targeting Credit Builder Loans.” 2020. Consumer Financial Protection Bureau. July 13, 2020.

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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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