By David Gasch
Whether we understand it or not, credit affects our lives, and finding ways to build credit responsibly can be difficult. While I wasn’t a credit expert before I started at Self, I now have the pleasure to work with our customers every day to help them make sense of how credit – and our product – works.
Here’s what I’ve learned after working with our customers, and what you need to know before signing up for Self.
Here’s a short overview of how the application works:
In an effort to limit any imposition on your credit, we do not perform a hard inquiry when applying. Instead, we submit a soft credit check to verify your information and identity – but this will not affect your credit.
We do not determine your eligibility based on your current credit score.
It can be difficult to find options to build credit, particularly with a low credit score. Most loans and credit cards require a well-established credit profile or a minimum credit score to participate. Self was established with the understanding that life happens and we all experience our own journey.
The Credit Builder Account is designed to help people with either no credit history or those who are looking to rebuild their credit. One way to get on the right track is to establish new, positive credit history.
Many major life decisions are contingent upon your credit health. Most lenders use your credit score to determine creditworthiness. If you want to purchase a home or vehicle, or even need a loan to pay for unexpected hardships, your credit score will likely play a role.
Even renting an apartment may require a credit check. It will determine your eligibility for certain financing options and affect the terms of repayment, including the amount of interest you’ll pay.
The Self Credit Builder Account offers a way to establish new credit history. By completing the program, you can show your ability to make payments on time and build a foundation for future credit endeavors. We want you to be ready for whatever life brings your way.
Unfortunately, it is difficult to establish credit if you don’t already have it or have made mistakes in the past. Improving your credit situation can be an uphill battle. Self was founded on the belief you should have the tools you need to move forward and live your best life – no matter your history. We all deserve a chance, even a second chance. If you’ve tried unsuccessfully to apply for credit in the past, the Credit Builder Account may be an option that could help you later “graduate” to other forms of credit.
The Credit Builder Account also provides a way to build savings while you build credit. It’s not a secret that saving money for a rainy day provides a wealth of benefits, but in today’s society it’s increasingly difficult to do so.
Once you complete the program, the principal funds are sent back to you (minus interest). Our customers often place the money they save into a savings account, use it for a deposit to obtain a secured credit card or even to take their family on vacation.
"Building credit while saving? You can't beat that." - Shanice S.
We work with customers every day to answer questions and help them better understand how the Credit Builder Account works. If you have questions or concerns, we’re happy to assist you. We want you to get the most out of the program and feel comfortable with your decision to participate.
With that in mind, here are some things that frequently come up in conversations with customers:
The administrative fee you pay when opening the account is non-refundable – even if you change your mind and close the account.
Payment history, which counts for 35% of your FICO credit score, is established by submitting all of your monthly payments on time. Paying off the loan early will limit the benefit.
Changing account terms
Once you agree to the terms and open the account, the terms are locked in and cannot be changed. If you want to change your payment amount, you can close the account and apply for a new Credit Builder Account. Keep in mind though, this will result in a new administrative fee.
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Your due date is determined by the day of the month you sign up. If you open the Credit Builder Account on the first day of the month, your monthly payments will be due on the first of each month moving forward. If a specific due date is a priority, you can designate the date by applying on the day you want those payments to be due.
Updating your personal information
You can update your address, email and phone number within your account. This functionality is not currently available on the app, but can be updated by logging into your Self account. You can update your payment methods on the website or in the mobile app. We do not have the capability of updating this information for you over the phone.
Grace period for late payments
There is a 15-day grace period before a late fee is assessed on your account and payments will not be reported as late to the credit bureaus until they are 30 days overdue. We understand that life can get in the way, so we want to offer as much flexibility as possible so you can make your payments before those deadlines.
Reporting to the credit bureaus
We are required by law to report factually on all of our accounts. It’s up to you to make sure you make your payments on time to avoid derogatory reporting. We’re here to help, but we cannot do it alone. Reporting occurs during the first week of each month for activity during the previous month, starting after your first due date.
If you experience hardship or feel you may not be able to pay future payments you can close your Self account at any time. As long as you reach out before your payment is 30 days past due, we can report the account as completed and paid in full, just as we would if you completed the full term.
You can make payments on your Credit Builder Account a few ways. We accept personal debit cards and checking accounts for payments. You can take advantage of our AutoPay feature to automatically submit your payment on any day, on or before the due date.
If you need more time to submit a payment, you can disable AutoPay and log in on a later date to make a payment manually. There are a few differences between the accepted payment methods. Be sure to choose the option that works best for you.
Debit card payments are processed immediately once they are submitted. Please note, when using a debit card, you will incur an expedited payment fee of $0.30 + 2.99%. In order to avoid a convenience fee, please link a bank account.
ACH transactions generally take 2-4 business days to process. This is not unique to us, and is common across the financial services industry. Payments will appear on your bank statement during this period. There is no fee for this type of payment, but if the payment fails we do assess a failed payment fee.
Many people want to pay off the Credit Builder Account early in the hopes that it can help them build credit more quickly. While you can absolutely pay off the account early and receive your savings sooner than scheduled, paying your account sooner does not help you build credit faster.
In fact, paying off the account early will limit the benefit of the Credit Builder Account. The purpose of the account is to build payment history by showing you can make each monthly payment on time. If you close the account early, you limit the amount of payment history you can build. For the best results, simply make your payments each month until the scheduled maturity date.
Remember, you don’t have to pay off your loan early in order to close the account either. You are welcome to cancel your account at any time, as long as you haven’t accrued any late fees you need to pay off first.
Once you reach your maturity date and the account is paid in full, the account will close automatically and we’ll process your payout. However, we do require seven business days to close the accounts and allow all funds to settle. This processing period is required for all closed accounts. We cannot release the funds immediately after the account closes.
Once the payout has been processed, we’ll send a check to the address on file or deposit the money into an eligible checking account. Our customers generally receive the payout 10-14 business days after the account is closed.
"Self has been a fabulous service for me, as I have started building my credit history. I jumped 30 points over the period of my account, and I just got my savings I built deposited into my bank account! I've already signed up for a second account, because it's guaranteed savings that boosts your credit score! Thank you for making it easier for millennials without established history to become more creditworthy!" - Evan John Miller-Nee, Self member
Once they complete their first Credit Builder Account, many of our customers will open another one. We welcome you to continue building your credit history and saving money with a new account. While we can only allow one active Credit Builder Account per customer at a time, you are free to participate as many times in a row as needed to achieve your goals.
Alternatively, many of our customers find the opportunity to “graduate” to other products such as secured credit cards or various other installment loans. The Credit Builder Account may serve as a stepping stone for future credit needs.
At the end of the day, whether a Credit Builder Account is the right choice for you, or you find success with a different credit building product, we wish you the best with your credit building journey.
The team at Self is passionate about working with individuals who are underserved by traditional forms of credit and hope you continue to find new opportunities to build credit and achieve your future financial goals.
And if you have a question along the way, we’re here for you and we’re happy to help.
David Gasch is a writer and IT Support Specialist at Self. He has a background in communications and media production. When he's not helping people build credit or helping customers, David enjoys hiking, cooking and exploring Austin. See David's profile on LinkedIn.