Credit Builder Loan
A type of loan designed to help people with no or poor credit build a positive payment history. The borrowed money is held in a savings account while you make monthly payments. When the loan is paid off, you receive the funds and have a track record of on-time payments on your credit report.
Related guides
- Full credit & FICO® glossary
Browse all defined terms by category.
- Installment Loan
A loan repaid in fixed monthly payments (installments) over a set period of time. Examples include mortgages, auto loans, student loans, and personal loans. Unlike revolving credit, installment loans have a fixed balance that decreases with each payment.
- Payment History
The most heavily weighted factor in your FICO score, accounting for 35% of the calculation. Reflects whether you've paid your bills on time. Late payments, collections, bankruptcies, and charge-offs all negatively affect this factor.
Frequently Asked Questions About Credit Builder Loan
What does Credit Builder Loan mean?
A type of loan designed to help people with no or poor credit build a positive payment history. The borrowed money is held in a savings account while you make monthly payments. When the loan is paid off, you receive the funds and have a track record of on-time payments on your credit report.
Is Credit Builder Loan important for my FICO® score?
Understanding Credit Builder Loan helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.