VIVA Personal Finance Blog

How does a credit builder loan work?

Updated: Aug 17

A credit builder loan is an installment loan used to establish your credit score and history. This is done through making on-time payments on the loan and broadening your credit mix.

Credit builder loans, also sometimes called starter loans, can be an effective way to establish a good credit score before a major financial event. Getting a mortgage or auto loan can be easier and less costly if you have a track record of on-time payments and a good credit mix.

Before taking out any new loan, including a credit builder, be sure to review the costs and APR from the loan provider to make sure that the loan is affordable.

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