Build Credit Even if You Feel Totally Helpless — This Woman Added 100 Points to Her Score

A woman smirks at the camera.
Kariel Morrison took out a credit-builder loan through Self Financial and watched her credit score increase by 100 points. Carmen Mandato/The Penny Hoarder
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This article was originally reported in May 2018.

Sometimes it feels like no matter what you do, your credit score just won’t budge.

It’s terribly frustrating. Sure, maybe your past self wasn’t as responsible with money — or maybe you faced some unexpected financial obstacles — but you’re really trying now.

Even so, that three-digit number just keeps holding you back. Buying a home feels forever out of reach, and even securing a credit card can be tricky.

Kariel Morrison gets it. The 26-year-old medical assistant who lives in Tampa, Florida, has overcome a lot in her life — job loss, homelessness and a debilitating car accident. She’d accrued unexpected debt and unpaid bills, and her credit score was stuck in the low 500s.

Just when she was feeling totally helpless, she decided to take out a credit-builder loan through Self Financial. Over the course of a year, she watched her credit score increase more than 100 points — and she even added $500 to her savings.*

What’s a Credit-Builder Loan, and How Can It Help You?

A credit-builder loan isn’t your typical type of loan. They’re designed specifically to help you build your credit.

Here’s what happens: You borrow money through a credit-builder account, but one of Self Financial’s partner banks holds onto that money until you’ve totally paid it off. (No spending temptations!) Each month, you make small payments toward that loan.

Self reports these payments to each of the three credit bureaus. The credit bureaus then see that you’re making payments, and your credit will start to reflect that.

Meanwhile, the money you’re putting toward paying off your credit-builder loan is held in a certificate of deposit (CD). This is basically just a bank account with a fixed interest rate, which means your payments are actually earning some money.

Once you’ve paid off your loan, you get all your payments back (minus the interest and fees). That’s how you’re able to start up a little savings stash.

Overcoming Hardships and Adding 100 Points to Her Score

If you have bad credit, you’ve probably faced your fair shares of challenges. Morrison, a single mom, is no different.

At 18, she lost her job as a receptionist. Her utility accounts were sent to collections, her car was repossessed, and her landlord kicked her out. She and her 1 ½-year-old had nowhere to go but a cheap hotel.

That year’s tax return was the windfall she needed to get back on her feet. She got another job and enrolled in classes to become a medical assistant.

Then, she was T-boned, and her car was totaled. She was six months pregnant and was prescribed three months of bed rest. All she could think was: “My credit is going to get worse. I’ll never be able to buy a house. I’ll never be able to do anything.”

At that point, her credit score was in the low 500s. She felt stuck. But then she heard about Self Financial’s credit-builder account. It could help her improve her credit and build her savings. Better yet, it didn’t care about her credit history. She decided to give it a try.

She took out a one-year loan and paid a one-time $15 administrative fee. (These fees will vary, but they start as low as $9.) Then, she made monthly $48 payments.**

At the end of the 12-month loan, Morrison’s credit score increased to 626 — more than 100 points. Plus, she had $500 stashed away.

When we talked with Morrison in May 2018, she was looking forward to buying a more reliable car and eventually a home.

“It’s hard, and it’s difficult, but if you really want something bad enough, things will get better for you,” Morrison says.

Opening a Credit-Builder Account Takes Minutes

Ready to build your credit?

Self offers four different credit-builder account plans, so you can find something that fits your budget. Oh, and the best part? No credit check.

It typically doesn’t take more than five minutes to sign up and select your plan

*Individual results may vary. 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. 

**Sample products are $48 monthly loan payment at a $545 loan amount with a $9 administration fee, 12-month term and 15.65% Annual Percentage Rate; Please refer to www.self.inc/pricing for the most recent pricing options.

Carson Kohler ([email protected]m) is a staff writer at The Penny Hoarder.