Safe Credit Building ToolsLearn how Boston Builds Credit can connect you with safe credit building tools.
Click below for downloadable resources that detail the facts surrounding secured credit cards or credit building loans.
What are some safe credit building tools or products, and why use them?
Banks, credit unions and other lenders offer many tools or products to help you build credit. If you’re just beginning your credit-building journey or if you haven’t used credit in a long time, consider one of the following:
Credit Building Loans
Credit Builder Loan – if you have little or no money in savings.
- A loan is opened for a specific dollar amount determined by the lender.
- You don’t need to provide cash up front.
- Monthly payments go into a locked savings account.
- At end of the loan term, the account will be unlocked and the money is yours.
Small Dollar Loan – if you have some money that you don’t need to touch for a while.
- A loan is opened for an amount you already have in a savings account or a certificate of deposit with a bank or credit union.
- That money is used to pay off the balance of your loan over time.
- When the loan is repaid, the money is yours again.
Want to learn more about credit building loans available to Boston residents?
BBC has created a convenient search tool that will help you to compare product features such as whether you will be charged an annual fee or a late charge or what the interest rate charges are. To learn more click here or access the credit building loan search tool below.
Secured Credit Cards
Secured Credit Card – if you need to establish credit, have a low credit score or are denied a regular credit card.
- You provide a cash security deposit, usually equal to the credit limit ($50-$200). Your security deposit remains untouched unless you don’t make your credit card payments.
- You build credit as the financial institution reports your payments to the credit bureaus.
Are you interested in learning more about secured credit card tools available to Boston residents?
BBC has created a convenient search tool that will help you to compare product features that include information on annual fees, late charges, and interest rate charges. Click here to access the secured credit card search tool or refer to the tool below to research various secure credit cards.
Important Criteria to Consider in Credit Building Products
|Does it report to all three major credit bureau companies?||A loan that reports to Experian, TransUnion and Equifax will optimally improve your credit score.|
|Can you afford the payment?||Know your budget. Your loan amount + interest rate should be affordable.|
|Are interest rates low and fees minimal?||High fees and interest rates will eat away at your savings.|
|For loans, is the term at least 12 months long?||A long-term payment history on a loan demonstrates better financial habits.|
|For secured credit cards, is there an option to transition to an unsecured credit card?||A secured credit card is a short-term tool. You’ll want a smooth transition to an unsecured credit card once the term ends.|
More ways to build credit:
In addition to secured credit cards and credit builder loans, there may be other products that can help you build and improve your credit. Think about your current situation – some of these products might be right for you now, some might be better for later, and some might not be right for you at all!
Unsecured Credit Card: A credit card that does not require a deposit. If you pay your balance in full each month, the card is generally free to use, unless there are annual fees. If you do not pay your balance in full, you will pay interest on the unpaid amount that you owe. Learn more.
Student Loan: Federal and private student loans are installment loans that can build positive credit history with on-time payments. You may be able to qualify for very low monthly payments by enrolling in an income-driven repayment plan. Learn more.
Become an Authorized User: An authorized user is a person who has permission to use another person’s credit card account, but is not legally responsible for paying the bill. Though the authorized user is not the primary card holder, the account information (positive and negative) will be reported on their credit report. Becoming an authorized user on an account can be a great way to get a credit history going, before you have credit in your own name. It is important that both you and the account holder understand the responsibility that you have to each other in this type of relationship.