The purpose of this page is to host comprehensive statistics about credit builder loan, including their effectiveness, popularity, and competitive features. We compile the data come from over 100 sources to help news professionals, lenders, and consumers use and improve the credit builder loan space.

These figures evolve as new and more recent data becomes available. Readers should note that three types of CBL exist, and this report is structured to cover them as a whole first then individually.

These statistics are not the same as and do not deal directly with components found on standalone offers such as APR and length. These figures instead provide a aggregate benchmarks against which those components may be compared.

Credit-builder loan statistics come from hallmark studies by the Consumer Financial Protection Bureau (CFPB²) and the National Bureau of Economic Research (NBER¹), discussions with account holders, market research of successful and failed products, bank and credit union disclosures, and our proprietary product database.

This report acknowledges the transparency similar publications, such as Forbes' credit card statistics report, bring to consumer finance products and aims to do the same.

Summary

Major Statistics

#1 Credit Builder Loans Improve FICO Score by up to 60 Points on Average

According to the National Bureau of Economic Research¹, Credit Builder Loans improve score dramatically over 6 months and progressively more through 18 months. The average FICO score increase is 55 points over 12 months. This figure is reinforced by the CFPB's study as well, which estimated the increase can go as high as 60 points.

These figures include borrowers who missed payments (despite autopay tools) and held extensive derogatory marks, which pull down the average. Consumers with only 1 previous installment loan have the highest potential for growth. Though not addressed in the studies, VantageScores—whose primary goal is to make credit more equitable and accessible—would likely mirror or outpace FICO results.

#2 Credit Builders have a 48.26% Chance of Establishing Credit Scores

The NBER study¹ shows 48.26% of consumers with zero credit history developed one after 18 months.

This number includes borrower who missed payments over those 18 months, which suggests the credit establishment rate is higher for consumers who make on-time payments and use additional credit building tools.

#3 Number of Americans That Can Benefit from Credit Builder Loans

The CFPB² found that approximately 26 million Americans, or 10%, are credit invisible. These Americans have no credit history and no credit of any kind, including credit cards, personal loans, mortgages, and lines of credit.

Invisibles are susceptible to high-risk consumer finance accounts (CFAs) because they often rely on turnkey solutions when making a first large purchase, often an automobile. CBLs provide a means to preempt the dependency on CFAs such as dealer financing.

#4 Total Amount in the Market

An estimated 1.12 billion dollars was lent with credit builder loans as of 2021. This figure is conservatively based on Self.inc's self-declared minimum revenue and product volumes⁴.

#5 Average Principal Amount

The average principal amount on credit builder loans is $3,283 with a range of $10 to $100,000, according to a collection of over 200 CBLs available though online providers, banks, credit unions, and community monetary funds³.

#6 Average APR

The average APR on a credit builder loan is 7.78% with a range of 0% to 35.99% according to a collection of over 200 CBLs available though online providers, banks, credit unions, and community monetary funds³.

#7 Average Duration (mths)

The average duration of a credit builder loan is 24 months with a range of 1 to 180 according to a collection of over 200 CBLs available though online providers, banks, credit unions, and community monetary funds³.

#8 Credit Builder Loans are Most Effective When Consumers Have Fewer than 4 Previous Installment Loans

The NBER's study¹ shows with strong evidence that the ideal number of previous installment loans is less than 4 to benefit most from credit builder loans.

Because these studies look at the impact of a single CBL, this number suggests that for every 4 previous installment loans, 1 CBL will drive the most improvements. The results are likely to be cumulative. The precise amount varies by age of installment accounts, number of revolving accounts, and derogatory marks.

#9 Credit Builders Help Consumers Save About $250 on Average

More research from the CFPB² shows that lenders tend to save $250 over the life of a credit builder loan. This savings is the result of payment-secured collateral structures in which the lender makes payments into a savings account of certificate of deposit and recovers the total at loan maturity.

#10 The Presence of a Credit Score Increases Credit Builder Uptake Rates

Consumers with credit scores have a much higher chance of taking a credit builder loan than those without a score. This dynamic speaks to the fundamental problem that consumers don't get credit builders until they have already made mistakes.

#11 Credit Builder Loans are Highly Correlated with Report Delinquencies

Treatment effects from a National Bureau of Economic Research study¹ show that above average installment credit activity and previous collections, charge-offs, or other derogatory marks is a high indicator of credit builder uptake.

#12 Consumers are Much More Likely to Take a Credit Builder Loan from a Lender They Already Use for Checking and Savings

The NBER's study¹ shows that consumers are extremely loyal to their existing providers and struggle to move savings to a new bank, even if the other bank offers lower APR.

#13 Consumers with Average Savings are More Likely to Take Credit Builder Loans

The NBER's study¹ shows that the most influential factor on credit builder behavior is an average amount of savings. When consumers have more or less than the average savings, their tendency towards CBLs shrinks.

#14 Consumers with Less Credit Activity Benefit More from Credit Builder Loans

The NBER study¹ shows that those with less installment activity fare better with credit-builders than those with more, suggesting CBLs tend to thicken reports and the negative character of that history.

#15 Demographics Statistics

Studies¹ have taken random samples of consumers most likely to take out CBLs. These samples provide insightful demographic data about Americans most interested in the offering.

Highlights: Payment-Secured Credit Builder Loan

Payment-secured CBLs (PSCBLs) require the borrower pay into a secured account over time and receive the funds once paid in full.

Highlights: Fully-Secured Credit Builder Loan

Fully-secured CBLs (FSCBLs) require the borrower pay into a secured account up front and receive the funds after the loan term ends.

Highlights: Unsecured Credit Builder Loan

Unsecured CBLs (USCBLs) do not require any up front payments from the borrower and instead operate like standard personal loans.

Citations

1. 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. https://doi.org/10.3386/w26110. https://thickcredit.com/studies-and-reports/nber-cbl-effects-on-behavior-scores-predictive-power
2. “Targeting Credit Builder Loans.” 2020. Consumer Financial Protection Bureau. July 13, 2020. https://www.consumerfinance.gov/data-research/research-reports/targeting-credit-builder-loans/. https://thickcredit.com/studies-and-reports/public-cfpb-targeting-cbls
3. Gomez, Noah. 2023. Review of Credit Builder Loan Offers Dataset. ThickCredit.com. Thick Credit. July 24, 2023. https://thickcredit.com/datasets/private-credit-builder-loan-offers.
4. “Self Credit Builder: Build Credit. Build Savings. Build Dreams.” n.d. Self. Accessed August 1, 2023. https://self.inc.