When you don’t have a credit score, it’s hard to get a loan. Without a loan, it’s hard to build your credit. For decades people have been caught in this Catch-22, and they are forced to take one of the slower and more roundabout ways to build their credit. Getting rid of that problem is the premise on which Self Lender was founded.
A good credit score comes with a host of advantages. So building yours as fast as possible is the smart thing to do. Here’s how that is done. Keep reading for our detailed Self Lender review.
The Old Method of Building Credit
In the past, there have been a few ways that you can build your credit if you have no, or low, credit to begin with.
Secured Credit Card –Through your bank or credit union you can “secure” the card by putting several hundred dollars into an account that is used to protect their loan to you in the event of default. This requires a large up-front cash outlay.
Co-Signer on a Loan – Someone that is older, or with better credit, can co-sign on a loan with you. This puts their credit at risk if you default.
Rental Agreement – Some landlords will report rental payments to the credit agencies. These aren’t common.
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These old methods worked, but they aren’t readily available to everyone. Self Lender changes that.
The Self Lender Method of Building Credit
Self Lender has a unique method of helping you to grow your credit. It works by giving you a loan. That loan is then deposited into a CD, and then you slowly pay it off over the course of 12 or 24 months. At the end of the term, you get the full amount, plus any interest that your CD has earned.
There are multiple tiers that you can do, here’s how a 12-month program looks like:
You choose the $48 per month plan. There’s a $15 administration fee to set it all up. For 12 months you pay $48 into your account each month as you build credit with the three credit reporting bureaus. At the end of the 12 month period, you receive $545 back, plus any interest earned while establishing a year’s worth of credit history.
If you do the math you can see that there’s a charge involved. When it’s all said and done, you will have put in $591, and receive back $545 (plus less than a dollar’s worth of interest). So is it worthwhile to open a Self Lender account?
Start Building Your Credit With Self Lender
Pros of using Selflender.com
Depending on your situation, Self Lender can help you establish the credit that you desperately need.
Get a loan without any credit
You need credit in order to take out a mortgage, auto loan, or anything else to get ahead financially. Self Lender helps you build your credit with no prior credit history so that those loans can be an option.
Build credit while saving
Unlike a traditional loan, where you receive money up front, a Self Lender loan is like a forced savings account. At the end of the term, you have your money, and you’ve built a credit history.
You keep the interest earned
Because your money was deposited into a CD, you get to reap the rewards of the interest earned on that CD. After the term is over, you can reinvest that money in another account.
Cons of using Self Lender
You can be denied
Self Lender does still make sure their borrowers are able to afford the loan. If you have had trouble with banks in the past, and there are severe blemishes on your banking records, you might not get a loan.
It’s not free
The point of the Self Lender account is to build your credit history; the secondary benefit is the forced savings. That means there’s a cost. In our example above, the APR on the loan comes out to 14.92%.
The interest is low
Current CD interest rates are less than 1%. Even at a 1% rate, our example above would only earn $5.45.
Who is the Best Fit for Self Lender?
Self Lender is a unique solution to get around the problem of not being able to build credit because you can’t get credit. But it’s not for everyone.
If you already have credit, even if it’s not great, you may not need Self Lender. Instead, a credit card that you charge a small amount on each month, and then pay it off in full, will be a cheaper method.
If you have a good income, but you haven’t established credit, then the $46 fee for a 12-month account may not be a big deal. It’s a small price to pay to gain a foothold.
For those who have exhausted other methods, and they’re frustrated with the current state of finances and being unable to start building credit, Self Lender is a great way to get the ball rolling.
Start Building Your Credit With Self Lender
