If you’re looking to build, or rebuild, your credit – there are plenty of “services” available. The credit industry is big business, and choosing the right product can be hard.
Credit building products are such a service, and sometimes they can help. They all have costs, so it’s important that you use the right ones, or you’ll end up paying for services you don’t need.
CreditStrong is a credit builder platform that uses installment loans and savings accounts to help you repair your credit and grow your savings.
But with so many other credit builder loans available, how does CreditStrong compare to the others? Is it priced fairly? We can help you figure out if CreditStrong makes sense for you, read on:
Table of Contents
Who is CreditStrong?
CreditStrong is a division of Austin Capital Bank. Austin Capital Bank (FDIC #58082) is a 5-star bank founded in Austin, Texas, in 2006. The goal of CreditStrong is to fuse two products: the installment loan and the savings account.
CreditStrong is available across the U.S., with two exceptions – Wisconsin and Vermont. Residents in those two states can’t use this because state laws prohibit this type of lending.
Here’s how it works: You apply for a CreditStrong loan, and if approved, you make monthly installment payments on that loan. The funds from the approved loan are stored in a locked savings account. It’s, in a sense, a secured line of credit.
At the end of the loan term, when you’ve paid the loan in full, your savings account is unlocked, and you have full access to the loan proceeds and the earned interest.
How CreditStrong Works
CreditStrong Installment Loan
Building credit when you have limited or no credit or improving your credit to recover from past borrowing mistakes can be difficult. CreditStrong aims to simplify those processes for you.
Here’s how it works in four steps:
- When you are approved for a CreditStrong account, the amount of the installment loan you are approved for is secured in a savings account in your name.
- You make pre-specified installment loan payments to your CreditStrong account. Like most installment loans, each payment will contain a principal payment portion and an interest payment portion.
- The interest payment portion goes to Austin Capital Bank to cover the expenses associated with offering the product. The principal payment portion is credited toward the locked balance on your savings account.
- Each month you have the loan, your payments are reported to credit bureaus as (ideally) on-time payments.
There is a 14-day grace period. You’ll be charged a late fee if you pay more than 14 days late. If you make your payment more than 30 days late, the payment will be reported as a late payment.
Payments can be automatically deducted from your bank account, making timely payments easier and helping you stay organized. You can also make manual monthly payments or extra payments if you choose.
CreditStrong Savings
CreditStrong helps you save money by storing the loan funds in a CreditStrong savings account. You can’t access the loan funds until you fully pay your CreditStrong loan. This “lock” feature will help you build up a savings account.
Since you are “forced” to make the monthly loan payments as part of your loan agreement, you’ll build up a credit history while preserving a CreditStrong savings balance At the end of the loan term; you’ll have a healthy savings balance that you can use as an emergency fund or for whatever other savings goals you happen to have.
Reports to All Three Major Credit Bureaus
CreditStrong reports your loan payments to all three major credit bureaus: Equifax, Experian, and TransUnion. This is crucial because that’s how your credit score is calculated. Some builders only report to one or two bureaus, which is OK but not as good as reporting to all three.
This also means that any late payments will be reported to all three credit bureaus. You can lean on CreditStrong’s autopay feature to help ensure you’re making on-time payments to avoid this. Autopay is not required, though.
Personal and Business Loans
CreditStrong offers personal and business loans to help you build your credit and save money.
You’ll apply with your social security number when taking out a personal loan. You’ll apply with your business’s EIN if you take out a business loan. Members can take out up to two loans with CreditStrong at any time. CreditStrong personal loans can have only one signer on the loan.
Business loans through CreditStrong work a bit differently. All company owners must be disclosed at the time of the loan application, including proof of ownership and identity.
CreditStrong Plans and Pricing
CreditStrong has three basic programs – each with two or three plans – to help you build your personal credit.
The three basic programs are called:
- Instal – Build
- Instal – Build and Save
- MAGNUM.
Instal – Build
The Instal program has two different plans and is meant to accommodate credit builders who want to work with the lowest available monthly payments.
$15/Month Plan
The $15 plan gives you a $1,000 installment loan. You can customize payments for a term of up to 120 months.
$30/Month Plan
The $30 per month Instal plan gives you an installment loan of $2,500. Again, you can customize your payments for a term of up to 120 months.
The longer available terms on the Instal plan are designed for people looking to build long-term reporting trades on their credit bureau, but at an affordable monthly cost.
Instal – Build and Save
Instal – Build and Save has three different plans you can choose from.
Build and Save $1,100
The Build and Save $1,100 will give you a $1,100 reported installment loan. You’ll keep the loan for 36 months and pay $38 monthly.
Build and Save $1,000
The Build and Save $1,000 will give you a $1,000 reported installment loan. You’ll keep the loan for 24 months and pay $48 monthly.
This account is for you if you want to build a $1,000 savings balance faster than with the Build and Save $1,100.
Build and Save $2,000
The Build and Save $2,000 will give you a $2,000 reported installment loan. You’ll keep the loan for 24 months and pay $96 monthly.
MAGNUM Plans
The MAGNUM plans are meant for business owners. You will “supercharge” your personal credit for business purposes. There are two MAGNUM plans available.
$55/Month Plan
The $55 per month plan gives you a $5,000 reported installment. You can customize your loan term for up to 120 months.
$110/Month Plan
The $110 per month plan gives you a $10,000 reported installment. Again, you can customize your loan term for up to 120 months.
With these plans, you can cancel any time and won’t be charged a penalty. Also, there is a $15 administrative fee associated with each of these plans.
Business Plans
If you’re a business owner, you might be happy to know that CreditStrong also has two accounts meant for business owners to get a loan in the name of their business.
You will need an EIN number to be approved for these types of loans and verification of all business owners associated with your company.
$115/Month Plan
The $115 per month plan gives you a $10,000 reported installment. You can customize your loan term for up to 120 months.
$199/Month Plan
The $199 per month plan gives you a $10,000 reported installment, and you can customize your loan term for up to 60 months.
Both of these plans report to major business credit bureaus, including:
- Equifax
- PayNet
- SBFE
CreditStrong is in the process of including Experian and D&B on those reports. Each business plan is subject to a non-refundable $149 loan expense fee.
Note that the interest rate on each type of loan plan varies. Personal loans typically charge an interest rate of between 14% and 16%.
Business loans (as of this writing) charge an interest rate closer to the 7% range.
CreditStrong Pros and Cons
Pros
- No hard credit check
- No minimum income requirement
- Build your credit safely
- Flexible payment terms up to 120 months
Cons
- You’re paying to build your credit
- Interest rates can be somewhat high
- Only impacts 35% of your overall credit score
Who is CreditStrong Best Suited For?
CreditStrong is ideal for those with no credit or poor credit who want to improve their credit score with a simple monthly payment. You may also find CreditStrong valuable if you have trouble saving money and want help building up a savings balance.
However, if building savings is your only goal, you may want to try simply automating savings account contributions from your paycheck or your checking account.
Put the money in separate online high-yield savings account if that will help you to keep the money out of reach.
CreditStrong Drawbacks
The challenge with credit builder programs like CreditStrong and others is their cost. For example, CreditStrong charges a one-time setup fee of $15; loan APRs can be as high as 15% or more.
You can get a secured credit card to accomplish the same goal (building your credit score) at no cost. You won’t pay anything if the card has no annual fee and you pay the balance in full each month. And you can get a secured credit card with as little as $200 upfront.
It’s why you should only consider CreditStrong as a last resort – if you have no funds available for a secured credit card and can’t qualify for a regular credit card. The savings component is a nice feature, however.
CreditStrong FAQs
CreditStrong adds your credit score to your CreditStrong account once per month. You will see your FICO 8 credit score updated when CreditStrong gets access to it.
You will typically see your CreditStrong account on your credit bureau within 30-60 days after making your first loan payment.
The amount that CreditStrong will increase your credit score will vary depending on your individual credit record. Several factors determine a credit score, and each situation is unique. For that reason, CreditStrong can’t give you a definitive number that your score will rise.
You may be denied a CreditStrong loan if one of three things occurs: The company is unable to verify your identity, your administrative fee processing fails, or your past banking history doesn’t meet CreditStrong’s guidelines.
Credit Strong Alternatives
The following credit builder programs offer a similar service to CreditStrong and can be considered alternatives. While their goals are the same, the approach varies. Choosing the program that fits your needs before signing up for a credit builder loan is important.
Self
Self (Formerly Self Lender) works quite similarly to Credit Strong. The money you borrow from Self is stored in a Certificate of Deposit. You make your pre-planned payments and get your CD funds (plus interest) at the end of the term of your loan agreement.
There are a couple of differences between Self and Credit Strong; the two main ones are that Self has an admin fee of $9 (as opposed to Credit Strong’s $15 fee), and Self charges a fee if you opt out of the program early (less than $5). To learn more, see our full Self Review.
MoneyLion
MoneyLion’s Credit Builder Plus account works much like Credit Strong and Self. One major difference is that you get a small portion of your borrowed funds upfront. Another is that instead of a set interest rate, you’ll pay a $19.99 monthly fee with MoneyLion. Taking out a $1,000 loan equates to an annual interest rate of 24%, higher than what CreditStrong and Self charge.
The Bottom Line on CreditStrong
CreditStrong can be a viable way for you to build or improve your credit. A CreditStrong account can also help you save money. If you are struggling in either of these areas (saving money and improving your credit score), you might find a CreditStrong account worth the cost, though I recommend checking out secured credit card options first. And if you are already doing well on your journey to strong credit, you may find that CreditStrong isn’t worth the cost.
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