Credit Builder Accounts: Apps to Boost Credit

If you need to build credit or fix your past credit mistakes, you have probably seen various credit building apps on the market. A credit builder app typically provides you with a credit card, loan or line of credit that will then be reported to the major credit bureaus. They can also help you establish and maintain a good credit score by offering personalized tips and advice and on how to do so.

The process of applying for a credit app is simple and doesn't involve a hard credit check. Some of the apps don't charge fees, while others come with a small monthly fee or allow customers to choose a payment plan that fits their budget and credit building goals.

You'll generally find four types of credit building apps to choose from:

- Credit builder loans:

A small credit builder loan may be a good option for you if you need to build or repair credit but can't qualify for a traditional loan. However, it works a little differently - you won't get the funds immediately when you apply for a loan. Instead, the lender will hold the money until you pay it off (minus any fees or unpaid interest). Regular payments on this account are reported to the three major credit bureaus, helping to boost your credit score. In addition, you build up savings at the same time.

- Credit builder lines of credit

These apps offer a line of credit you can use to make purchases. As a rule, though, you can only use a line of credit at their store or app. You must make on-time payments after using the credit line and pay back the amount borrowed with payments reported to the credit bureaus, simulating responsible credit card use.

- Bill payment apps:

Some credit builder apps let you build credit by paying for everyday expenses like your streaming services, subscriptions, and utilities. Instead of only traditional forms of credit, such as credit cards and loans, these accounts allow payments made towards subscription services to be reported to the credit bureaus, enabling you to establish credit gradually.

- Credit monitoring services:

These credit building apps help users monitor their credit scores and take steps to take control of their finances and build credit. With the app, users can create a payment plan, track their payments, and get feedback on their credit scores. It also helps users track their progress and provides personalized advice to improve their credit score.

Regardless of the option you choose, it's better to consider these apps as part of your overall financial strategy, carefully evaluate their terms and fees if any, and remember to use them responsibly. Like any other tool for building credit, apps to boost credit are only helpful when used correctly. Therefore, be sure to make payments on time and avoid overspending when setting up your account plan. Ensure that your rent, utilities, and other monthly obligations are paid on time.