The Credit Builder Loan is designed to report your positive payment history to the credit bureaus to help you increase your credit score.
Here is how the Credit Builder Loan is similar to a standard loan:
- You make regular payments that include principal, interest, and fees, on a bi-weekly or monthly schedule.
- Your payments are reported to both major credit bureaus in Canada: TransUnion and Equifax.
- Making on-time and successful installment payments have a positive effect on your payment history which impacts 35% of your overall credit score.
Here is how the Credit Builder Loan is different:
- Our Credit Builder Loan is not like a traditional loan in that you do not receive money upfront. Instead, you make payments to us and these payments accrue an equity balance. This equity balance is what you receive at the end of your loan term. We report your payments to the credit bureaus which builds a positive payment history to improve your score, assuming the payments are made successfully and on-time.
- At the end of the term, you receive the money you have accumulated (less the interest). We understand however, that emergencies happen, so you have the option to withdraw the funds from your Credit Builder Loan at any point in the program (with our small $20 early withdrawal fee).
- There is no hard credit check or hard credit inquiry involved when applying for the Credit Builder Loan. Refresh will only conduct a soft inquiry which has no impact on your score.