Continuing our series with part 3, we will now discuss installment accounts and how they can help you with your credit building or efforts to rebuild your credit profile. If you remember part 1 of our series, we discussed the balance scale
concept where one side you have good items on your credit report, derogatory items on the other side, and the needle in the middle is your score. The side with the most weight determines your credit score. Also, in part 1 we discussed the credit scoring factors. Knowing the factors, roughly 10% of your credit score is based upon the types of accounts and mix of accounts. Adding installment accounts (ex. loans) to your credit can be a powerful asset to you, if you have a lot of revolving accounts (credit cards). In this article we will discuss the importance of installment accounts, and break down some very helpful installment credit building options.
Why Installment Accounts?
In the space of credit building, installment accounts are the safest option to use. Unlike revolving or open ended accounts, installment accounts have an end goal, typically build a savings that accrues interest, and have a fixed monthly payment. If your credit profile lacks installment accounts, you should consider adding a couple to improve your credit profile mix.
Installment Account Credit Building Options
Installment accounts can help show lenders how you can handle a long term commitment, and certain credit builders can show lenders your ability to repay for a large purchase such as a car or a home. Let’s show you some very popular installment credit builders that can not only help you build a healthy credit mix on your credit profile, create a savings portfolio, but also show lenders what you are made of!
Experian Boost
Experian Boost is not only easy, it’s FREE! Experian hit a homerun with this product because they give you the ability to earn points on your Experian credit report by giving you credit for paying bills you pay
every month! That’s right, you can get credit for paying your utility bills, cell phone bills, and subscription services like Netflix, YouTube Music, and other streaming services. This helps lenders see your ability to keep up with your important monthly expenses. Simply sign up for an account and link your bank account. Each time you make a payment Experian sees it and reports it on your credit report after it sees you making 3 payments. Although this service only helps with your Experian credit report, and the point gain won’t be huge, if you are building credit for a mortgage loan, every point matters and helps. Perhaps this could boost your Experian report enough to be your middle score for a mortgage.
Rent Reporters
Rent Reporters is one of our personal favorite credit builders. We discussed Rent Reporters in part 2 of this series which discusses leveraging credit building for mortgage approval. One very well known fact, your rent will never show up on your credit report unless you stop paying and the landlord
sends you to collections. Fortunately that can now be a thing of the past thanks to Rent Reporters. In my personal opinion, if you are building your credit report to get approved for a mortgage, Rent Reporters is a MUST HAVE. This reports as a real estate tradeline on your Equifax and TransUnion credit reports, and shows lenders your ability to handle a mortgage payment. Even better, there are no credit checks, so no hard inquiry on your credit. You pay your rent on time each month, it’s time to get credit for it! Sign up for Rent Reporters today!
Credit Strong
Credit Strong is another of our personal favorite credit builders. Starting with as little as $15/month, helps you build your credit and builds a savings account at the same time! Credit Strong reports to all 3 major credit bureaus, and there is no credit check! So that means no hard inquiries on your
credit report! and when you finish all payments, you have built a savings account that is all yours! Perhaps you have been wanting to take a nice vacation, or treat yourself. Credit Strong helps you do that with the savings account. Even better, the savings account earns interest! How can you beat that? When a young adult comes to us looking to learn how to establish credit, Credit Strong is our very first recommendation to them, along with graduates of our credit repair program. Credit Strong also has
Self Lender
Self Lender is pretty similar is pretty similar to Credit Strong. You are building credit and savings at the same time. Self Lender also reports to all 3 major credit bureaus with no credit check or hard inquiries. The main difference is Self Lender sets up a CD account instead of a savings account. But here is
where Self Lender shines, once you have made 3 payments on-time, and built $100 in savings, you will qualify for a Self Lender Credit Card! This helps you have both installment and revolving accounts reporting on your credit profile! In our opinion, Self Lender has knocked it out of the park with this credit builder!
Kikoff
Kikoff is the easiest of all credit builders. A whopping $24 in $2/month installments, gets you a $500 tradeline reporting to all 3 major credit bureaus with no credit checks or inquiries. Put this on auto pilot and have a
positive account building your credit perpetually. You can renew this as many times as you like, so you can build your credit for years to come.
Final Thoughts
Whether you are building your credit for the very first time, rebuilding your credit after a major life event, or after the credit repair process , these installment credit building options are a perfect fit! Our CEO and Founder has taken advantage of these
resources himself, and experienced an over 50 point boost in his personal credit profile! You simply cannot go wrong with these credit builders (unless you default or pay late). As a word of caution, remember the credit scoring factors and build your profile accordingly. Although credit mix makes up roughly 10% of your score it is important to balance your credit profile with just the right mix of installment and revolving accounts. Having too many or not enough of a certain type of account could cause you not to see your full potential on your credit score. Also, the big factor 35% which is payment history, be sure to pay these on time or you will have wasted your time in signing up for these products, remember they report the bad along with the good.
