CreditStrong Credit Builder Loan Review

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For those with limited or negative credit, credit builder loans are an effective way to establish a positive credit history, improve your credit score, and progress toward a stable financial future.

Featured among our best credit builder loans, CreditStrong’s Instal loan is available in most states, doesn’t require a credit check for approval, and offers flexible loan terms and monthly payments. However, there are more affordable options. Read on to see whether CreditStrong is a good fit for you.

CreditStrong Overview

CreditStrong is a division of Austin Capital Bank, an FDIC-insured community bank headquartered in Austin, Texas. Austin Capital Bank also owns FreeKick Credit Builder – Product Name Only, another product that made our best credit builder loans guide. Boasting a community of over 1 million people and businesses, CreditStrong offers loans and other tools for building credit to customers nationwide (except for those in Vermont and Wisconsin).

To qualify for a CreditStrong account, you must be at least 18 years old and a permanent United States resident with a physical address in the country. You must also have a valid Social Security number or individual taxpayer identification number; an email address; mobile phone number (or Google Voice account); and a checking account, debit card, or prepaid card in good standing. 

CreditStrong does not have credit or income requirements for approval, and applying won’t result in a hard inquiry on your credit report. So long as you confirm your identity and meet the other requirements listed above, you’re eligible.

CreditStrong has mixed reviews from customers online. The company has a Trustpilot rating of 2.7 stars out of five across 35 reviews, and its Better Business Bureau profile has a rating of under 1.27 stars out of five, with 90 complaints filed in the past three years. More feedback can be found in over 360 Google reviews linked to CreditStrong’s corporate address in Austin, where the company has a rating of 2.7 stars out of five.

In negative reviews across all sites, common concerns cited by CreditStrong customers include poor customer service and a lack of results. However, many negative reviews showed a lack of understanding about what CreditStrong loans do and how they work, which may have led to unrealistic expectations.

How CreditStrong Works

With no hard credit check and minimal requirements to open an account, CreditStrong claims its application process should take less than five minutes.

CreditStrong offers several credit-building products: Instal, Revolv, and CS Max. These accounts aren’t mutually exclusive, so you can simultaneously hold an Instal and Revolv account.

CreditStrong Instal

CreditStrong Instal Account – Editorial Name Only is most similar to other credit builder loans. It comes in three different varieties, each of which comes with a $15 non-refundable administrative fee. The loan amounts and interest rates are similar for each one, but the loan terms, monthly payments, and total interest charges differ:

  • Instal 28 — $28 monthly payment and 48-month loan term, resulting in a $1,344 reported installment account and $1,010 saved. An interest rate of 15.61% yields approximately $334 in interest charges.
  • Instal 38 — $38 monthly payment and 36-month loan term, resulting in a $1,368 reported installment account and $1,100 saved. An interest rate of 15.73% yields approximately $268 in interest charges.
  • Instal 48 — $48 monthly payment and 24-month loan term, resulting in a $1,152 reported installment account and $1,000 saved. An interest rate of 15.51% yields approximately $152 in interest charges.

Choosing a lower monthly payment means you’ll pay more in interest. The tradeoff is a longer loan term that results in more credit-building potential as long as you make on-time payments.

The first payment of your Instal loan is due one month after opening the account. CreditStrong recommends making monthly payments automatically by linking a checking account, but you can pay manually with a debit or prepaid card (a convenience fee of 2.99% + $0.30 applies).

With each payment, the portion that goes toward the loan principal is deposited in an Austin Capital Bank savings account in your name. Those funds are locked during the loan period and become available once the loan is paid off. While the savings account is FDIC-insured, it earns only 0.01% interest, so the money you put into the loan effectively sits idle.

CreditStrong reports your payments to the three major credit bureaus, adding data points to your payment history, which is the most important component of your credit score. A track record of on-time payments should positively impact your credit, though CreditStrong does not guarantee any particular outcome.

If you find CreditStrong is not for you, you can cancel your account anytime with no early termination fee. If you cancel before your loan matures, you’ll receive the principal amount accrued in your savings account. However, a relatively large portion of your early payments go toward interest (rather than the principal), so you may get back much less than what you’ve put in.

While there’s no fee for canceling your loan or paying it off early, late payments by 15 days or more incur a late fee of 4% of your monthly payment. Payments received more than 30 days after they’re due are reported as late to the credit bureaus.

CreditStrong Revolv

CreditStrong Revolv Account – Product Name Only adds a $500 revolving credit line to your credit report. Revolv account holders don’t actually have access to this money. It just adds a revolving account to your credit report.

That said, customers have the option to make regular contributions to a Revolv savings account, which CreditStrong reports to the credit bureau as. Three consecutive on-time payments will add $100 to your credit limit, maxing out at $1,000. Once you close the account, you get these contributions back.

If you’ve paid off installment loans but don’t have a credit card, Revolv can build credit by diversifying the types of credit on your credit report. If you already have a credit card, Revolv can add to your existing credit limit, which will help keep your credit utilization ratio low.

The CreditStrong Revolv account doesn’t charge interest on your balance but costs $99 annually. 

CreditStrong CSMax

CreditStrong CSMax Account – Product Name Only works like its Instal account, just with higher monthly payments and 60-month loan terms. CSMax has four different plans, varying in monthly payment amounts and interest rates. All accounts also charge an initial $25 non-refundable administrative fee. 

  • CSMax 49 — $49 monthly payment and 60-month loan term, resulting in $2,940 reported installment account and $2,500 saved. An interest rate of 6.99% yields approximately $440 in interest charges.
  • CSMax 99 — $99 monthly payment and 60-month loan term, resulting in $5,940 reported installment account and $5,000 saved. An interest rate of 7.21% yields approximately $940 in interest charges.
  • CSMax 199 — $199 monthly payment and 60-month loan term, resulting in a $11,940 reported installment account and $10,000. An interest rate of 7.31% yields approximately $1,940 in interest charges.
  • CSMax 449 — $449 monthly payment and 60-month loan term, resulting in $26,940 reported installment account and $25,000 saved. An interest rate of 3.02% yields approximately $1,940 in interest charges.

With such a high monthly payment over such an extended period, CSMax offers aggressive credit building. However, it’s not for most consumers. It’s geared toward people with disposable income to set aside for these payments but may have let their credit score fall by the wayside.

Though CSMax interest rates aren’t as high as the Instal accounts, those long payment terms result in steep interest charges.

How Much Does CreditStrong Cost?

CreditStrong’s costs across its eight plans are as follows:

PlanSetup feeInterest rateInterest Paid
CreditStrong Revolv$99 annuallyN/AN/A
Instal 28$15 one-time15.61%$334
Instal 38$15 one-time15.73%$268
Instal 48$15 one-time15.51%$152
CSMax 49$25 one-time6.99%$440
CSMax 99$25 one-time7.21%$940
CSMax 199$25 one-time7.31%$1,940
CSMax 449$25 one-time3.02%$1,940

CreditStrong Pros and Cons

CreditStrong offers an assortment of loan options that are widely available in the US, but you may have less costly options for building credit. While some of the best credit builder loans cost less than CreditStrong, you can also look into secured credit cards to build credit. Some of the best secured credit cards even come with rewards and perks.

CreditStrong Pros

Flexible loan options — CreditStrong lets you choose from three different loan terms and monthly payments. You don’t have much control over the loan amount since all Instal loans are around $1,000, but that’s not critical if your objective is to build credit.

Reporting to three credit bureaus — CreditStrong reports your payments to all three major credit bureaus (Equifax, Experian, and TransUnion), so you can improve your credit score across the board.

No cancellation fee — If your loan doesn’t have the impact you want, you can cancel it at any time at no additional cost. 

Monthly credit score — You’ll be able to find this with basic credit monitoring, but it’s still a nice feature to keep track of credit-building progress.

CreditStrong Cons

Low yield on locked funds — The savings account where your loan funds are kept earns interest at only 0.01% APY. That’s below the national average of 0.42% for savings accounts and far below what you could get from a high-yield savings account or CD.

Costs — CreditStrong has no monthly fees, but Instal loans charge interest rates over 15% on top of a $15 administrative fee. As noted above, you’ll pay over $300 in interest for the 48-month Instal loan. That expense may be worthwhile to improve your credit, but there are less costly alternatives.

How Does CreditStrong Compare to Its Competition?

CreditStrong is one of the best credit builder loans, offering some of the highest total loan amounts compared to its competitors. See how CreditStrong compares to some of its competitors.

CreditStrong vs Self

Self and CreditStrong are leading providers in credit builder loans. Self is available in all 50 states and CreditStrong is available in 48. The two services are also very similar in fee structure, charging a setup fee and interest on the remaining loan balance. 

CreditStrong offers slightly better interest rates and more flexible loan terms. While CreditStrong’s Instal loans can last anywhere between 24 to 48 months, Self only offers 24-month loan terms. 

However, Self also offers a Self Visa secured card after you make three on-time payments, which is secured by the amount you’ve already contributed to your credit builder loan. This is a great perk which adds a revolving line of of credit to your credit report without a hard inquiry. It’s also cheaper than CreditStrong’s Revolv account, costing just $25 annually compared to Revolv’s $99 annual fee.

Read our Self review here.

CreditStrong vs DCU Credit Builder

The DCU credit builder is easily one of the best credit builder loans on the market, with just a 5% interest rate. The only issue is availability. The credit builder loan is only available to DCU members. If you don’t live in certain areas, you’ll have to jump through several hoops to join. However, once those hoops have been jumped through, you get access to one of the lowest rates for a credit builder loan. 

CreditStrong can’t compete with DCU when it comes to cost, but CreditStrong still has longer loan terms as DCU’s loans only last up to 24 months. 

Read our DCU credit builder loan review here.

Who Is CreditStrong For?

CreditStrong’s Instal loan is well-suited to anyone with limited or negative credit history who is looking to build (or rebuild) their credit profile. It’s an especially good fit if you’re looking for a longer loan term since you can get an Instal loan for as long as 48 months while many others top out at 24 months.

Applying for a CreditStrong credit builder loan is only a good idea if you know you’ll be able to make monthly payments on time and in full. Late or delinquent payments may drop your credit score, defeating the purpose of getting the loan in the first place.

Before you apply for a credit builder loan (with CreditStrong or otherwise), make sure you understand how your payments will accrue into savings. CreditStrong provides clear amortization schedules so you know how much of each payment you make goes toward interest versus principal.

CreditStrong Frequently Asked Questions (FAQ)

Does CreditStrong actually give you money?

CreditStrong does not give you money up-front like a traditional installment loan. Instead, funds paid into your CreditStrong credit builder loan go into a locked savings account that unlocks when your loan matures.

Does CreditStrong do a hard pull?

CreditStrong does not check your credit when you apply for a credit builder loan, so no hard pull will be added to your credit report.

What bank does CreditStrong use?

CreditStrong is a division of Austin Capital Bank, which serves as the custodian for locked funds during your loan term. Austin Capital Bank is headquartered in Austin, Texas, and is a member of the FDIC.

Read the original article on Business Insider

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