In a Nutshell: One of the biggest financial challenges people with low credit scores face is finding an opportunity to improve. The Self Credit Builder Account provides consumers with the opportunity to build their credit and establish savings. And customers don’t need a minimum score to qualify. After making a certain number of on-time payments, account holders can qualify for a secured credit card. Self also provides access to financial education resources to ensure consumers have the information they need to make smart financial decisions.
Jernessa Jones was a single mom who lost her job and started missing payments on her credit account due to lack of income. As she struggled financially, her credit score dropped, and she couldn’t get approved for a product that could help her escape her situation. At the time, she felt hopeless.
But today, her credit score is in the 700s, and she works as a financial coach with Operation Hope, a nonprofit that helps people build better financial lives. Jernessa came full circle from desperation to teaching others how to get out of difficult situations — and her journey started with Self.
“There are so many people out there who want to do the right thing — build credit, get back on track, move on with their lives — who don’t even get the chance to prove themselves,” said Lauren Bringle, Accredited Financial Counselor® at Self. “That’s what Self provides.”
Self offers Credit Builder Accounts that have helped more than 1.5 million people build credit, with an average jump of 32 points. Its product is similar to an installment loan, but people don’t receive the money until payments are completed. By the time that happens, they’ve built credit history and accumulated a healthy savings fund. Thanks to Self, that approach is now available to everyone.
“You can build your credit while you’re also building savings,” Bringle said. “This company was started because our founder made a mistake with his credit. As he started trying to find a responsible way to build his own score back up, he came across the idea of a credit builder loan, which used to be a niche product. So he used his background in tech and engineering to make it available nationwide.”
Credit Builder Accounts Improve Scores and Savings
“The credit builder account works like a loan, essentially, except our banking partner holds the money in a certificate of deposit insured fund,” Bringle said.
Self sets no minimum credit score for eligibility to access its credit builder product. Account holders choose a monthly payment plan that fits their budget, and by making timely payments, they’re simultaneously building savings and credit.
“As you make your payments, we report them to all three major credit bureaus,” Bringle said. “You have this opportunity to build your credit history, and payment history is 35% of your FICO credit score. It can be impactful to make on-time payments, and you’re also potentially building toward a deposit for a secured card.”
Self doesn’t need to pull an applicant’s credit report because there is no minimum threshold for eligibility. Doing so is often a prerequisite for accessing most financial products, and it can have an adverse effect on the consumer’s score.
However, applying for Self’s Credit Builder Account or its secured card won’t negatively impact their credit score through a hard credit inquiry.
“We do not do a hard credit pull for either the credit builder account or the secured credit card,” Bringle said. “You could potentially access two credit products with no hard credit pull, and you don’t need a credit score to get started.”
Access to Secured Cards Increases Financial Opportunities
After users spend time paying into the CBA, they can qualify for a Self credit card. The Self app features a built-in eligibility tracker that allows users to monitor their progress toward qualification. Once they qualify for the Self credit card, they can quickly apply through the app.
“If you’re working toward the credit card, you can track your progress,” Bringle said. “You can tell if you’ve made the minimum number of monthly on-time payments or built up enough equity in your account to qualify for the credit card. We make it as clear and straightforward of a process as we can for our customers.”
One of the prerequisites for accessing the secured card is a minimum of $100 in a credit builder account. As consumers continue paying into the account, they have the option to increase their credit limit accordingly. Using that line of credit for in-budget purchases, and paying off the balance in a timely and responsible manner, can further raise their credit score.
In early 2021, Self took its offering to the next level by launching unsecured credit limit increases for qualified users. After proving they can responsibly manage a secured card, they can move up to an unsecured card. That is the next stage in their financial journey, allowing them to continue building credit and practicing positive money management skills.
“It’s the next step for people who are trying to build their credit,” Bringle said. “That provides the third step in our credit-building process. We try to simplify the process for people as much as possible in a one-two-three punch.”
Education Helps Consumers Make Better Use of Tools
Self provides valuable tools for building credit and reclaiming financial independence. However, those tools require knowledge to use them, which is especially true in money management.
That’s why Self also emphasizes the educational side of its mission.
“We put in a lot of effort to support our customers as best we can through their journey to build their credit,” Bringle said.
The Self blog is another rich source of educational resources. It covers a wide range of personal finance topics, including budgeting, saving, taxes, credit, and debt. It also covers niche topics like wedding finance, personal finance for military service members, and higher education.
The blog is only one platform Self uses to disseminate financial knowledge. It also conducts outreach to users and consumers at large through a variety of virtual channels.
“We provide a lot of educational content on our social media channels. We also have a growing email tool where we’re constantly sending people resources to help them understand their account better and build those positive credit habits over time,” Bringle said. “We also add things like payment reminders and information about why paying into their credit builder account is so important.”
Self: Fair and Equal Access to Recovery Resources
According to the U.S. Federal Reserve, about 40% of people in the United States say they can’t afford a $400 emergency. Their obstacles include a lack of savings, inadequate credit, and an inability to access emergency personal loans. That has been especially challenging during the COVID-19 pandemic as people struggle to make ends meet with reduced pay, furloughs, and layoffs, leaving many in the same situation as Jernessa.
“It’s been a big wake-up call to a lot of people to get their credit in shape in case they ever need to borrow or focus on their emergency savings,” Bringle said.
Self recently partnered with a third-party survey company to analyze the impact of credit challenges among on particular community: Black Americans. About half (47%) of respondents with credit challenges said they were worried they would be judged on their credit score. And 43% even said they’d rather discuss their sex lives than their credit scores.
Those fears may lead to inaction or ignoring the problem altogether.
Self presents an effective way to tackle multiple hurdles with one financial product. It allows them to simultaneously build savings and credit while getting financial education and hands-on experience with secured products. And when they graduate to unsecured lines of credit, they have developed the habits to use them responsibly and further improve their situations. All they need is a chance to get started and the support to achieve success.
“We provide access and opportunity that a lot of people may not get elsewhere,” Bringle said. “Credit can be very confusing. We try as hard as we can to take the guesswork out of building credit and give people a more clear, step-by-step process they can follow.”
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