These loans help you grow your credit and savings

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These loans help you grow your credit and savings

Should you focus on building up your savings or focus on paying off debt and building up credit first?

This is one of those fundamental questions that consumers face, and finding the right answer can be difficult. But it’s no longer a matter of choice: you can strengthen your savings and your credit simultaneously, using what is called a constructor credit loan.

These are loans with built-in savings accounts. Initially, they were offered by credit unions and smaller banks, but now a larger institution, Austin Capital Bank, is embracing the idea by offering bad credit payday loans for credit builders online.

Presentation of Credit Strong

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Credit Strong is a new credit loan.

The Texas-based bank introduced a product called Credit Strong, and here’s how it works: You take out a loan for a relatively small amount – up to $ 2,000 – and allow the money to be locked in a bank account. savings, by earning interest.

You access savings once you have paid off the loan, within two years. Making your payments on time helps improve your credit.

“Consumers typically accumulate credit by opening a credit card and then spending on purchases. By opening a Credit Strong account with us, consumers can instead build or grow their credit by setting aside their savings, ”said Erik Beguin, President and CEO of Austin Capital Bank, in a press release.

Help for those with little or no credit

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Credit Strong can help you if you have little or no credit.

The loans are aimed at consumers whom the Consumer Financial Protection Bureau, or CFPB, calls “invisible credit”: nearly one in five Americans – about 45 million – who have either a poor credit history or no credit history.

The CFPB says credit loans can help you build a credit history for the very first time, and the savings “could be used in an emergency (instead of more expensive financial products).”

A recent Federal Reserve study found that nearly 40% of Americans do not have the resources to cover an unforeseen emergency expense of $ 400.

Loans are also useful if you have used credit before but badly. Responsible, timely installment loan repayments allow you to recover from your credit errors and increase your swallowed up credit score.

No large cash deposit required

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Credit Strong is a good option for those who cannot afford to make a large deposit.

Credit Strong is different from other credit building or building options, such as secured credit cards, which require large upfront cash deposits. Millions of Americans don’t have that money.

“With the creation of this new product, we have removed the barrier of an initial security deposit and also eliminated the temptation and risk of overspending often associated with credit cards,” said Beguin.

Credit Strong will open an account for a consumer who does not have a security deposit and credit score, and without doing a “hard” credit check that will show up on a credit report.

Credit bureaus kept in the loop

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Credit Strong reports your progress to major credit bureaus, including Experian.

But during the life of the loan, Credit Strong will regularly report the account holder’s loan payments to the three major credit bureaus, Experian, Equifax, and TransUnion. This helps the customer to establish a credit history.

A person’s payment history with loan products – including credit cards, home loans, student loans, auto loans, and homebuilder loans – accounts for 35% of the current FICO credit score. used.

Credit Strong does not rely on your credit score to determine if you qualify for an account, and you may even have bankruptcy or other negative marks on your credit history and still be approved. There is no minimum income requirement.

Good for “almost everyone”

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A wide range of people would benefit from a Credit Strong account.

“Credit Strong makes the ability to create good credit accessible to almost everyone, from working class individuals with an imperfect credit profile and recent graduates who want to start building a credit history, to sophisticated credit users. looking to complete their profile with an affordable payment [loan], says Béguin.

There are some eligibility conditions. To apply for a Credit Strong account, you must:

  • Be at least 18 years of age and be a permanent resident of the United States with a residential address in the United States
  • Have a valid social security number or individual tax number.
  • Have a current account, debit card or prepaid card in good standing.
  • Have a mobile phone number or a Google Voice account.
  • Have an email address.

Accounts are available in all states except North Carolina, Vermont, and Wisconsin.

Credit Strong says he can’t estimate how much any of his accounts will increase a customer’s credit rating. But, as Experian’s credit bureau points out, if you have bad credit or no credit history, “a credit loan can help you build a record of trustworthy financial behavior – without using a credit card. “.

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