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Does Bank of America Have a Credit Builder Loan?
Although Bank of America has various options for those with limited or bad credit, they currently do not offer loans specifically for building credit.
However, we have identified some excellent online lenders, including Credit Strong and Self Financial, that provide true credit builder loans.
Credit builder loans are installment loans typically used by consumers with bad credit. The loans are repaid in monthly payments over a defined loan term to create a positive credit history that is then reported to the credit bureaus and documented on the consumer’s credit report.
Bank of America does offer several secured credit card account optionsto establish a credit history, build credit, and a semi-secured personal loanwith a maximum of a $500 credit limit that will help build your credit.
What Bank of America Products Build Credit?
The Bank of America Balance Assist programallows borrowers a small credit line between $100 and $500 for a flat $5 fee which, depending on the amount borrowed, translates to a low annual percentage rate (APR) of between 5.99 to 29.76%.
To qualify, you must have a current checking account with the bank that has a positive cash balance. All loans must be repaid within 90 days and payments are then reported to all three credit bureaus in the same manner that any credit card or credit line account would be.
The lender application does require your social security number because they do check your credit history; however, the lender agreement encourages those with bad credit to apply by statingthat the existing banking relationship is “taken into account”.
Bank of America currently promotes three secured credit card optionsthat allow users to improve their credit score and feature no annual fees. We should first understand what differentiates an unsecured credit card or unsecured loan from its secured counterparts.
Lenders such as credit unions, community banks, and credit card issuers usually offer secured or unsecured forms of credit. Two common examples of secured accounts are home (mortgage) loans and car loans, which both involve property that has monetary value to the lender.
A secured loan offers the lender some degree of protection in the form of collateral. For example, if a credit union decides to extend a credit line in the form of a car loan, they can repossess the vehicle if the borrower fails to make the payments.
Credit card lenders generally offer unsecured credit cards to borrowers with a good credit score and usually offer perks including lower interest rates, no annual fees, cash advance options, no balance transfer fees, or security deposit fees.
Secured credit cards are an option for those without good credit scores and lenders typically require a security deposit that is equal to the credit card debt limit. The lender will refund the upfront security deposit in the future if the borrower uses the credit card responsibly.
Bank of America’s secured credit cardsinclude the Customized Cash Rewards Secured Visa Card, Unlimited Cash Rewards Secured Visa Cards, and the BankAmericard Master Card. All have no annual fee, allow balance transfers, and include regular credit score updates.
Is It Hard To Get a Bank of America Secured Credit Card?
No, it is not hard to get a Bank of America secured credit card. As with the majority of secured cards, these products are designed for those with poor credit scores and past credit-related concerns that will not prevent you from opening an account.
However, Bank of America’s secured cards require a minimum of a $300 security deposit upfront.
You must also have a current checking or savings account for making the security deposit via electronic transfer. You may wonder, “Can I Open A Bank Account If I Owe Another Bank Money?“, check out our article for more information about this.
Bank of America’s secured cards allow for initial security deposits of up to $4,900, which is the maximum credit limit.
When used properly, the cards should be an effective means of building credit. Although they have no annual fees or monthly fees, the cards all have higher interest rates that exceed 20%; therefore, this may represent a costly option for financing purchases over the long term.
Our Recommendations for Credit Builder Loans
For those wanting to boost their credit score using credit builder loans, Credit Strong and Self are among the best lenders.
The credit builder loans from both companies have some similarities, including no minimum credit score requirement, a low one-time administrative fee, credit score monitoring, and offer transparency in presenting all fees and interest rates.
Borrowers are reminded that unlike traditional credit cards or personal loans, neither of these credit builder loan options will help you finance an upfront purchase.
Credit Strong
As a division of Austin Capital Bank and a five-star rated financial institution in Texas, Credit Strong offers innovative credit builder loans for consumers with poor credit that are seeking to establish a positive payment history and pursue a good credit score.
Credit Strong offers a good variety of loan options with loan amounts ranging from $1,000 to $10,000 and terms from one year to ten years. Monthly payments start at only $15 per month.
The three categories of installment loans offered include the Subscribe, Build & Save, and Magnum plans.
After selecting a loan program, the loan funds are deposited and secured in a savings account where they remain throughout the term. The funds deposited in the savings account will earn a nominal fixed rate of interest.
Each month, you will make a payment that applies to the principal and interest associated with the loan, and Credit Strong regularly reports all loan activity to the three credit bureaus.
Once the loan has been fully paid, the savings account funds are then released and available for your use.
Credit Strong did a studyof it customer base and found that, on average, customer increased their credit score by 25 points within three months of getting the loan. If they stuck with it for 12 months, their credit score rose by 70 points on average.
Try Credit Strong
Self
Self Financial, Inc. is a Texas-based organization that uses cutting-edge technology to help consumers with establishing, rebuilding, or improving their credit profile with tools including credit builder loans and secured credit cards.
Self’s credit builder application begins by having the borrower select a monthly payment of either $25, $35, $48, or $150. The credit builder loans range from approximately $600 to $1,800 which are paid back over 12 or 24 months.
Following approval, the loan funds are depositedinto a Certificate of Deposit (CD) account held by one of their FDIC-insured banking partners, where it will remain for the duration of the agreement.
Customers may schedule their fixed monthly payments to automatically be processed from their bank account. Each month, Self will report the loan payment activity to the three credit bureaus, Experian, Equifax, and Transunion.
After successfully paying off the loan, the CD account is unlocked and the borrower has access to the funds.
Try Self
Comparing Key Variables Between Lenders
Lender | Administrative Fee (one-time) | Loan Term Range | Loan Amount Range | Monthly Payment Minimum |
Credit Strong | $ 8.95 to $ 25.00 | 12 to 120 months | $ 1,000 to $ 10,000 | $15 |
Self | $ 9.00 | 12 – 24 months | $ 600 to $ 1,800 | $25 |
Credit Builder Loans vs Secured Credit Cards
Secured credit cards have traditionally been a viable option for those seeking to establish or improve their credit that are unable to obtain approval for a personal loan, unsecured credit card, or another credit line.
In the last decade, credit builder loans have entered the market as an installment loan alternative. Credit builder loans allow consumers to build a payment history, which is the most criticalsingle factor that impacts the credit score.
The Consumer Financial Protection Bureau (CFPB) reported that among consumers with no current debt, the average consumer who chose a credit builder loan achieved a 60-point credit score, while also boostingtheir average savings balance by $253.
The decision whether to pursue a credit builder loan or a secured credit card should largely be based on your individual circ*mstances and some of the keys to consider include:
- A secured credit card requires the borrower to have sufficient upfront cash for making the security deposit i.e., at least $300 for Bank of America’s cards.
- A credit builder loan generally involves making a longer-term commitment, with monthly payments for a minimum of one year.
- Those unable to obtain a checking account will typically have an easier time being approved for a secured credit card.
- A secured credit card provides some convenience by allowing you to pay bills online and may offer perks such as points, travel protection, and cashback awards. (How to Use a Credit Card to Build Credit)
Regardless of whether you choose to use a credit builder loan, secured credit card, or another option, you must meet the payment obligation and be on time.
Also Read:
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- Banks That Don’t Use ChexSystems
- Free Online Checking Account: No Opening Deposit, No Credit Check
- Disputing ChexSystems
- ChexSystems Removal: A Step-by-Step Guide
- 12 Second Chance Bank Accounts
- Best Banks for Real Estate Investors
- The Credit Builder Loan Options Currently Available From Chase
- Does Navy Federal Have a Credit Builder Loan?
- Does Wells Fargo Have a Credit Builder Loan?
- Banks That Don’t Use ChexSystems
Garit Boothe
I am a Certified Lending and Credit Specialist and first gained experience fixing my own credit. My own credit scores went from the 500s to the 800s in one year. I studied economics at The George Washington University and now have my own business working with financial technology companies. I manage my own investments and live in Salt Lake County, Utah with my wife and two kids.
