Credit-Builder Loans: Can They Help You?

What Is a Credit-Builder Loan?

If you have bad credit or no credit at all, you’ll likely have a hard time getting a loan. After all, the paradox of credit is that it’s hard to get credit without already having a credit history, much like trying to get a job without any work history.

A credit-builder loan can be a good option for those with no credit or bad credit because credit-builder loans do not require the borrower to have good credit to get approved. However, you will need to show that you have enough income to cover the monthly payments.

Just like a traditional loan, your payment history will be reported to the major credit bureaus. That means you need to make all of your payments on time if you want to build up your credit score.

How Do Credit-Builder Loans Work?

Credit-builder loans, also sometimes called “fresh start loans” or “starting over loans,” are set up differently than traditional loans in order to minimize risk for lenders. 

These loans are typically small amounts, such as $500 or $1000. In addition, unlike other types of loans, you do not receive the money upfront and pay it back later. Instead, this process is reversed.

The definition of a credit-builder loan is a loan where you make the payments first and receive the funds after you have finished paying off the loan. The lender deposits the amount you are borrowing into a savings account or certificate of deposit that will be held for you until you finish making all the payments. Until that point, you can’t access the funds.

Do You Need a Credit Check to Get a Credit-Builder Loan?

Because credit-builder loans are low-risk, in many cases, you can apply for credit builder loans with no credit check. You’ll likely just need to provide your income to prove that you can afford to make the payments.

Banks That Offer Credit-Builder Loans

Most of the big national banks, such as Chase, Bank of America, and Capital One, do not typically offer credit-builder loans, although Wells Fargo offers secured personal loans.

The best credit-builder loans can often be found at local banks and credit unions or through online lenders.

Payment history makes up 35% of your FICO score.

Payment history makes up 35% of your FICO score.

Are There Downsides to Getting a Credit-Builder Loan?

With a “fresh start” loan, as with any loan, it can hurt your credit score if you miss any payments. Remember, payment history is the biggest contributing factor to your credit score, weighing in at 35%. So when it comes to building credit, you need to be prepared to make every single payment on time.

In addition, you will be paying interest on the loan and potentially an application fee or other fees, although some lenders may partially refund the interest if you pay the loan back on time.

Finally, it may be several months to over a year before you finish paying off the loan and receive your borrowed funds. Building up a credit score by making payments on a loan takes a minimum of six months of payment history, according to FICO.

Other Ways to Build Credit

For those looking to build or rebuild credit, credit-builder loans are just one option. If you need to build credit fast, also consider one of the credit piggybacking methods we cover in “The Fastest Ways to Build Credit.”

By purchasing authorized user tradelines, for example, you can add seasoned tradelines with years of credit history to your credit report within just days.

Credit-Builder Loans: Can They Help You?

Conclusions on Credit-Builder Loans

For those who may be struggling to build credit due to bad credit or lack of credit history, a credit-builder loan represents one way to get a loan with no credit check and start building a positive credit history.

Just like other types of loans, credit-builder loans come with interest and fees, and the main downside of this type of loan is that you don’t have access to the funds until after you have made all the payments.

On the other hand, when you finish paying off the loan, you will have built up a record of on-time payments and you will have a chunk of savings to take home.

Credit-builder loans can also make a great complement to other methods of building credit, such as credit piggybacking.

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Wholesale Tradelines: What Are You Really Buying?

When searching for seasoned authorized user tradelines, you’ll probably see a lot of companies promising “wholesale tradelines.”  

What does it mean if a company offers “wholesale tradelines?” If a tradeline company says they have wholesale tradelines, does that mean they have the best tradeline prices? Or is this term more of a marketing gimmick than a useful indicator of a tradeline company’s pricing?

Keep reading for our perspective on the topic of wholesale tradelines.

What Is the Definition of Wholesale Tradelines?

To begin, let’s define the word “wholesale.” If something is described as wholesale, that typically means it is being sold in large quantities to be resold by others, such as retailers. In other words, it is usually not sold to the end consumer.

Therefore, “wholesale tradelines” would seem to mean tradelines that are not sold directly to consumers, but to other people or businesses who then resell the tradelines to the end consumers.

However, in reality, many companies simply use this buzzword as a substitute for the word “cheap,” which is not only inaccurate but often intentionally misleading.

Marketing Tactics Used Within the Tradeline Industry

If you look at the prices of the companies boasting wholesale tradelines, what do you notice? Do they really have better prices?

Most of the time, the prices are on par with what you might expect from any other tradeline company.

However, if you are a tradeline broker, they may try to entice you with a broker “discount” of up to 50%.

Although you may see companies offering 50% off tradelines, it's important to determine your bottom line dollar amount.

Although you may see companies offering 50% off tradelines, it’s important to determine your bottom line dollar amount.

That 50% off sounds appealing until you consider the fact that even with the 50% off discount applied, those tradelines might still be more expensive than tradelines of the same quality at a company that has truly fair pricing to begin with.

For example, we often see competitors selling tradelines for $1,500 while our normal price for that same tradeline is around $600. Then, if you buy into the 50% off program you would then get that tradeline for $750. In this case, our regular pricing is still cheaper, even without a discount.

So would you rather go for the 50% off deal for $750 or just buy from us at $600? Additionally, if you are a broker at the 30% off level with us, you would get that same tradeline for $420.

In this example, our pricing is actually 72% lower than the competition’s pricing, but we don’t need to use that style of advertising when we know our pricing is lower than most other companies in the first place.

Tradeline Broker Programs

While many tradeline companies do offer tradeline reseller discount programs, these programs are typically quite expensive to join. We have seen fees ranging from $499 to nearly $3,000 to join these broker programs.

If you have to pay that much money in order to get a discount on your tradeline orders, then what are you really gaining?

In contrast, at Tradeline Supply Company, LLC, it is completely free to be a broker representative and even to join our White Label broker program. Our brokers get discounts of up to 30% off all tradeline orders depending on their sales volume.

Our prices are already some of the lowest in the industry, and with an extra 30% off on top of that, our pricing should be very difficult to beat, despite any “wholesale” advertising gimmicks other companies may try to offer. In fact, our margins are very slim at this level of discount which goes to show that our prices are as low as we can possibly make them.

Plus, even customers who are not tradeline resellers can use our package deal discount to save up to 30% on tradeline packages.

While other tradeline companies may offer discounts that seem bigger at first glance, their prices also often start much higher. Our lower starting prices mean our customers and brokers get the best value for their money, especially considering that our prices include a money-back posting guarantee. That’s why we don’t need to use gimmicks or deceptive tactics to market our tradelines.

Conclusions on Wholesale Tradelines

If you are looking to buy tradelines wholesale, you really need to look carefully at what your final price will be so you can compare apples to apples. For example, when you see the 50% off sale at the high-priced retailer at the mall, you often realize that it is still more expensive than purchasing the same item for at a discount store or on the internet.

Additionally, imagine how you would feel if you bought into a “discount” program that cost you thousands of dollars and then you find out that the company decided to increase their prices to offset that discount. All of that money would have essentially been wasted.

It is important to be able to see past the marketing claims and flashy discount programs. Make sure to think through your tradeline purchase, compare bottom line prices, and do the math for yourself to make sure you are getting the best deal possible.

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