What to Expect When Your Credit Builder Account is Ending

Hands holding a phone with the Self app

By Lauren Bringle, AFC®

There are a few reasons your Credit Builder Account might be ending, whether you completed your full loan term or closed your account early. Or maybe your Credit Builder Account is over, but you have the Self Visa® Credit Card.

Whatever the case, here’s what to know about your credit and your payout once your Credit Builder Account is over.

If you complete the full loan term

A loan term is the length of time you agreed to make monthly payments on a loan.

For example, if you have a 12-month loan term, you agreed to make 12 monthly payments for a fixed amount each month before the loan is complete.4

If your Credit Builder Account “matures” or “goes to term,” it means:

  • Your Credit Builder Account payout will automatically start to process once the account is closed. (So make sure your address and bank account info are up-to-date!).
  • You paid the account for the full length of the loan, so your account is now closed.
  • You now have a complete loan, paid as agreed, on your credit report, and have built history with the credit bureaus.

Bonus? Before your account ends, you may have a chance to use your savings progress as a security deposit on the Self Visa card, so you can build more credit history and diversify your credit mix (10% of your credit score).1

If your Credit Builder Account ends when you have the Self credit card

If you have the card, congrats! You now have the option to build even more payment history, using a different type of credit.

Since you used some of the money you paid into your Credit Builder Account as the deposit for the Self card, it will impact how much money you get back from your payout. The money used to secure the card will be held as long as your card account is open.

You can also choose to decrease the credit limit on your card if you want more money back. Heads up though, decreasing your credit limit may increase your credit utilization, which could hurt your credit.

So choose carefully how much savings progress you want to go towards your credit limit vs. how much you want to get back in your payout. Learn how credit limits affect your credit score.

If you close your account early…

As long as your account is in good standing, if you close it early:

  • You will get the money you paid in back, minus the interest charged on the loan and the nonrefundable administrative fee you paid to open the account.
  • Any unpaid fees – such as late or returned payment fees – on your account will be subtracted from your payout.
  • There is an early withdrawal penalty that typically ranges from $0.14 to $0.42, depending on your account size. Though pricing is subject to change.
  • Your account will be reported to the credit bureaus as closed – paid as agreed. Since the account is closed, we will not report any more monthly payment activity on the account.

Note: If you pay off your Credit Builder Account early (as opposed to closing or canceling the account) you’ll need to take an extra step to close your account to start your payout process.

To close your Credit Builder Account, login to your account here and follow the prompts.

What happens to my credit once my Credit Builder Account ends?

When your Credit Builder Account ends, Self will report to the credit bureaus that your account is closed. If your Self account is in good standing when it ends, it will be reported as closed and paid as agreed.

Since we only report account activity, once there is no more activity on that account, we will no longer report it to the credit bureaus. Don’t worry though, the account will remain on your credit reports for lenders or anyone viewing your credit history to see. How strongly the Self account impacts your score will decrease as time passes, just like other items on your report.

If you have no other credit accounts, or have other negative items on your credit, your credit score may drop when your Self account closes. Learn more about how credit reporting works at Self.

That’s one reason it might be helpful to continue building credit with Self or other tools after you finish your Credit Builder Account.

Why should I keep building credit after my Credit Builder Account ends?

Think of your credit like a living, breathing thing – in order to grow, you have to keep nurturing it. And you may need good credit to qualify for certain jobs, buy a house or car, rent an apartment and more.

Whether to keep building your credit (and how to do it) depends on your goals and situation.

If you raised your credit score from the 500s to the 600s, for example, but your goal is to buy a house in the next year or two, you may want to keep building credit to get your score as high as possible first.

Why? A few reasons:

  • Your credit score could impact the interest rates and types of loans you can qualify for.
  • The minimum credit score to qualify for a 3.5% down payment (instead of a 10% one) on a first time home buyer loan is 580.2 Some lenders may have higher minimum score requirements.
  • Typically, the lowest interest rates are reserved for people with credit scores in the high 700s and above.3

Put another way, someone with a credit score of 760 would likely qualify for lower interest rates than someone with a credit score in the 600s. Over the life of a mortgage, even 1-2% lower interest rates could save you tens of thousands of dollars.3

There are several ways to keep building credit with Self, such as:

  • Get a second Credit Builder Account
  • If you’re eligible, access the Self Visa Credit Card
  • If you get the card, consider increasing your credit limit as you pay into another Credit Builder Account, or potentially gain access to an unsecured credit limit increase at Self.

You can also learn other ways to build credit.

Bottom line

Whether you close out your Credit Builder Account early or let your loan mature, make sure you understand what comes next to keep building your credit so you can build your dreams.

Check your savings progress and credit score, track your eligibility towards the credit card and more in the Self app. Get the app or login now.

Sources

  1. MyFICO
  2. FHA Loan Requirements
  3. Loan Savings Calculator

Sample products: A loan with a $25 month payment, 24 month term with a $9 admin fee at a 15.92% Annual Percentage Rate with a finance charge of $89; A loan with a $35 month payment, 24 month term with a $9 admin fee at a 15.97% Annual Percentage Rate with a finance charge of $125; A loan with a $48 month payment, 12 month term with a $9 admin fee at a 15.65% Annual Percentage Rate with a finance charge of $46; A loan with a $150 month payment, 12 month term with a $9 admin fee at a 15.91% Annual Percentage Rate with a finance charge of $146. Please refer to www.self.inc/pricing for the most recent pricing options.

All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A., Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A., Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to ID verification and consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus, which may negatively impact your credit score. This product will not remove negative credit history from your credit report. All loans subject to approval. All Certificates of Deposit (CDs) are deposited in Lead Bank, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC. The Self Visa® Credit Card is issued by Lead Bank, Member FDIC, Equal Housing Lender.

About the author

Lauren Bringle is an Accredited Financial Counselor® with Self Financial – a financial technology company with a mission to increase economic inclusion by helping people build credit and savings. Connect with her on Linkedin or Twitter.

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Written on May 25, 2021
Self is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@self.inc.

Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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