Credit Builder Loans | Rize Credit Union

How does a Credit Builder loan work?

A Credit Builder loan is designed to help you build or improve your credit by establishing a positive payment history.

Here’s how it works:
We deposit the full loan amount – say, $1,000 – into a special Rize savings account where it’s held and earns dividends. You then make affordable monthly payments, like $100, which we report to the credit bureaus. As you make each payment, a portion of the loan is released and becomes available for you to withdraw.

By the time your loan is fully paid off, you’ll have built credit and saved money at the same time!

How does a Credit Builder loan help my credit score?

If you’re new to credit, a Credit Builder loan helps you establish a credit history. As you make on-time monthly payments, we report your positive payment activity to the three major credit bureaus – Experian, Equifax, and TransUnion. After about six months, your credit file usually has enough information to generate a score.

If you’ve had past credit issues, this loan can help rebuild your score – just be sure to stay current on all your accounts. Consistent, on-time payments over the life of the loan can steadily boost your credit.

Tip: You can track your credit score and monitor changes directly through Savvy Money in digital banking – it’s free, easy to use, and won’t affect your score.

What are the benefits of a Credit Builder loan?

A Credit Builder loan does more than just help improve your credit – it sets you up for long-term financial success. Here are some key benefits:

Builds your credit score by reporting on-time payments to the credit bureaus
Helps you save money – your payments are held in a savings account and released as the loan is repaid
Easier to qualify for since it’s secured by the loan amount itself
Earns dividends while your money is on hold in your savings account
Encourages smart saving habits by setting aside money each month
Develops financial discipline that can help when managing larger loans in the future

Can I get a Credit Builder loan if I have past credit issues or no credit history?

Yes! Credit Builder loans are designed specifically to help members who are just starting out or working to rebuild their credit. Having no credit – or past credit challenges – won’t prevent you from applying. We’re here to help you take positive steps toward a stronger financial future.

Can I pay my Credit Builder loan off early?

Yes, you can – but we don’t recommend it. The purpose of the loan is to help you build a consistent payment and savings history, which is reported to the credit bureaus. Paying it off too early may reduce the positive impact on your credit score. Sticking to the full term helps you get the most benefit!

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