PSA: I thought those 'credit builder' loans were a total scam for years.

My score jumped 40 points after I finished a $500 one through my local credit union in January. Anyone have a similar experience with a specific product?

4 comments

4 Comments

margareto262mo ago

Totally had the same doubt! My credit union offers a similar secured loan. You basically pay into a locked savings account and then get the money back at the end. It reports as an installment loan, which helps your credit mix. That mix is a huge part of your score people forget about. Seeing that jump after it reports is the best proof it works.

charlescraig2mo ago

Yeah, it's a weird trick but it really does work. That credit mix part is no joke.

jade_jenkins1mo ago

But what happens if you need that money before the loan term ends? Seems risky to lock up cash just for a credit score boost.

jade5172mo ago

Honestly I thought the whole credit mix thing was just some made up myth for years. Then I got a small personal loan to fix my car and my score went up like 40 points in two months. It felt like unlocking a secret level in a game, totally changed how I look at credit now.