Feeling a bit lost in the universe of credit scores? Don't stress - we've taken the guesswork out of it for you. In this blog, we'll run through why credit scores are actually important and how credit builder apps could help to boost them.
PSA: If you’re in a tight spot right now, Cleo could spot you up to $250*. No credit checks. No employment verification. No stress.
Understanding Credit Scores
Before we dive into the round-up of some of the best credit builder apps, let's run through the importance of credit scores.
We know what you're thinking… “If we're just a body of cells on a floating space rock, why do we have credit scores?”
We totally get it. We're all thinking it.
However, your credit score is a crucial number that lenders, landlords, and sometimes even employers use to gauge your financial situation.
Think of it as your financial SAT score, but instead of getting you into your dream college, it helps you get things like a mortgage, a car loan, or even a better insurance rate.
A poor credit score can cost you thousands of dollars over your lifetime due to higher interest rates. A high score, on the other hand, can open up a world of opportunities. Luckily, improving your credit score isn't an impossible task, and that's where credit builder apps come in handy.
What's a Good Credit Score?
Scores can range from 300 to 850, and are typically broken down into categories ranging from 'poor' to 'excellent.'
According to Experian, one of the three major credit bureaus in the United States, credit scores are typically broken down as follows:
- Excellent Credit: 800 to 850
- Very Good Credit: 740 to 799
- Good Credit: 670 to 739
- Fair Credit: 580 to 669
- Poor Credit: 300 to 579
A 'good' credit score is usually defined as 670 or above. This is the minimum credit score needed for many conventional loans.
A 'poor' credit score is typically defined as any score below 580. With a score in this range, you may have difficulty getting credit, or you may be required to pay higher interest rates or fees 🙃
Credit Builder Apps
Credit builder apps are handy, user-friendly apps designed to help you improve your credit score. They can educate you on financial management, help you to manage your credit, and even report your progress to credit bureaus to show you're trustworthy. Plus, the best thing is that they do most of the hard work for you 😍
Cleo: The Credit Builder Card
With the Credit Builder Card**, you’re in charge of deciding how much money you want to spend. The money you add to your card’s security deposit then becomes your credit limit (FYI, there’s a minimum deposit of $1).
For example, if you add $50 to your security deposit and spend $50, that’s it. It’s really hard to go over 💸
And with our auto repayment option, it’s all set up so it’s almost impossible to miss a payment.
How can the Credit Builder Card help build your credit?
Cleo reports your payment history to the credit bureaus and over time, on-time payments may help your credit score.
And if you select the ‘carefree credit building’ option, your payment will automatically be applied so you never have to worry about missing it.
The Self credit building app is a service designed to help individuals with poor or no credit history build up their credit scores. Self offers a credit builder account which is essentially an installment loan saved in a CD (certificate of deposit). You make monthly payments toward this loan which is then reported to all three credit bureaus.
Next up is Experian Boost. It's a free service which was launched to help individuals improve their credit scores instantly by incorporating more financial data into their Experian credit report. Experian Boost considers payments for utility bills (like gas, water, electricity) and other recurring payments (like your Netflix or Spotify subscriptions), which traditional credit reports might overlook. For this to work, you'd need to let Experian access your bank account information to confirm that these regular payments are being made on time. Once verified, these payments are included in your credit history.
Credit Builder Plus by MoneyLion
The Credit Builder Plus membership from MoneyLion offers a unique combination of credit building and personal loan access. For a small monthly fee, users get access to low-interest credit-builder loans and 0% APR cash advances. Additionally, MoneyLion provides personalized credit-building tips to guide you on your journey.
Empowering Your Financial Future
No matter where you are on your financial journey, remember that it's never too late to start building or rebuilding your credit.
And remember, to improve your credit score, it's important to make your payments on time, use a small portion of your available credit, maintain a good mix of credit types (like credit cards, mortgages, and auto loans), and apply for new credit only when you need it.
Credit builder apps are there to help you boost your credit score, enabling you to unlock better financial opportunities. Stay consistent and motivated 💪
For more tips, check out How to Send Your Credit Score to Bootcamp 🚀
Enjoy this post? Give it a share or send it along to a friend. You never know, it could make a big difference. Big love. Cleo 💙
*Eligibility requirements apply.
**The Credit Builder Card is issued by WebBank, Member FDIC pursuant to a license from Visa USA Inc. Access to the Card is subject to approval.