Connect with us

Bad Credit

Self Review 2020: Credit-Builder Loans and Cards

Published

on

Self, formerly known as Self Lender, is a financial services company that offers two different products aimed at helping customers with bad or little credit. Its premier offering, called the Credit Builder Account, allows you to receive a credit-building loan in the form of a certificate of deposit (CD) that matures once you complete your payments. The company also offers a credit-building credit card. These products are offered along with robust mobile and online account management services.

Do you have financial questions that go beyond your credit score? Speak with a local financial advisor today.

Self Overview and History

As of August 2019, the company rebranded from Self Lender to Self. Although its products and services didn’t change much following the rebranding, it soon after introduced the Self Visa® Credit Card. This credit-building tool, in conjunction with the Credit Builder Account, is what Self specializes in.

Overview of Self Pros – Four account options and two credit-building tools are available
– No upfront cash or income requirements needed for approval Cons – Somewhat high APRs
– Credit score improvement can vary Best For – Anyone with bad or little to no credit
– Those who feel comfortable managing accounts through online/mobile platforms Self Credit Builder Account Self Credit Builder Account: Fees & Rates Fee/Rate Type Amount Non-refundable administrative fee $9 (one-time charge) Interest Rate/APR Varies depending on the size of your loan Payment fees – No fee when paying through a bank account or with a prepaid card
– $0.30, plus 2.99% convenience fee when paying with a debit card Late payment fee 15-day grace period, then fee equal to 5% of your monthly payment amount Early withdrawal fee Depends on your account size, but usually less than $5

Self’s Credit Builder Account is its main offering, as its focus is to help customers improve their credit scores through a small installment loan. This loan isn’t provided to you directly by the company; rather, the funds are placed in an FDIC-insured CD account at one of Self’s banking partners. This account is technically yours, but the funds won’t be released until your loan is paid off.

There’s no application needed to become a member of Self, but you will need to apply for a Credit Builder Account. Within this application process, you will specify which of Self’s four account options you want:

  • $25 monthly payments over a 24-month term, resulting in a $520 payout
  • $35 monthly payments over a 24-month term, resulting in a $724 payout
  • $48 monthly payments over a 12-month term, resulting in a $539 payout
  • $150 monthly payments over a 12-month term, resulting in a $1,663 payout

If you receive approval for a Credit Builder Account, you’ll immediately be charged a one-time $9 administrative fee. Simultaneously, Self’s banking partner will place the loan funds in your CD account. Starting the following month, your payments will begin, with each being equal for the loan’s entire length. If you’re late on a payment, there’s a 15-day grace period, followed by a late fee equal to 5% of your payment amount.

As you make payments, Self will report them to TransUnion, Experian and Equifax, which are the three main credit bureaus. The moment you make your last payment, the bank through which your CD is held will unlock your account. After 10 to 14 days, the full loan amount will then be disbursed to you, minus any applicable fees and interest. The funds can be sent to you either by check or via an ACH money transfer.

The Credit Builder Account is available through Self’s online and mobile platforms to residents of all 50 states. To apply, you must be at least 18 years old and be a U.S. citizen or permanent resident with a physical address in the U.S. You’ll also need to have a Social Security number, a valid email address, a phone number and either a bank account, debit card or prepaid card. Note that payments are fee-free when you use a bank account or prepaid card, but a convenience fee of $0.30 plus 2.99% will be tacked on to debit card payments.

Self Visa® Credit Card

Self (Formerly Self Lender) Credit-Builder Review 2020

The Self Visa® Credit Card offers another way for Self members to improve their credit score. To be eligible for this card, you’ll need to:

  • Currently have an open Credit Builder Account
  • Make three on-time monthly payments to your Credit Builder Account
  • Have at least $100 in your Credit Builder Account
  • Have your account in good standing

This is a secured credit card, which means it’s backed by some form of collateral that protects the card issuer in case of default. In order to provide this backing, you’ll need to decide how much of your Credit Builder Account’s $100 or higher balance will act as collateral. In addition, this amount will also become your card’s credit limit.

During the application process, Self will not run a credit check on you. That’s because you will already own a Credit Builder Account, which means the company already has knowledge of your credit situation.

Once you receive your card by mail and activate it, you’re free to use it as you please. Because Self’s card is a Visa, it’s accepted virtually everywhere.

How Much Can Self Raise Your Credit Score?

As Self lists throughout its website, most credit scoring agencies use your payment history to account for 35% of your credit score. This fact is at the heart of why the company’s two products – the Credit Builder Account and the Self Visa® Credit Card – have the opportunity to be so beneficial for you.

For starters, Self will not do a hard credit pull when opening your account, which is good for those with low credit. Then, once your account is open and you’re making payments, Self will report your payment history to the three major credit bureaus (Experian, Equifax and TransUnion).

It should take about one to two months for your Credit Builder Account to show up on your credit report. Also, don’t be alarmed if you don’t see “Self” on your credit report, as sometimes the company is listed as a “secured installment loan” from one of the bank’s partners.

All of this should have a strong effect on your credit score, but significant changes could take up to three months to materialize. But because everyone has a different credit situation, results through Self can vary. More specifically, if you make late payments to Self or manage your outside accounts poorly, the overall benefits of its products could be completely negated.

In addition, for those looking to pay off their Self accounts early, the cumulative effect of on-time payments could be drastically weakened. Credit bureaus want to see people sustain payments over long periods of time, and cutting your account’s term short could limit your potential upside.

Customer Experience

Self (Formerly Self Lender) Credit-Builder Review 2020

When you open an account with Self, be prepared to manage your account solely through the company’s online and mobile platforms. Both online and mobile accounts have the same features, so you have the convenience to choose whichever works best for you.

The Self mobile app is available for both Apple and Android users. Features include the ability to check your Credit Builder Account’s balance and savings progress, open a Self Visa® Credit Card, set up automatic monthly payments and more.

Current and former Self customers are apparently very happy with these mobile apps. The iOS app averages a 4.9-star rating (out of 5) from more than 40,000 user reviews on the Apple app store. The Android version of the app gets a 4.8-star rating out of 5 from nearly 20,000 Google Play store reviews.

In terms of customer service, Self offers live chat, email and phone support. You can find the company’s phone number, email address and live chat link through your online or mobile account.

What to Watch Out For

Self is a fully legitimate credit-building company that has helped many people with low or little to no credit. However, that doesn’t mean that its offerings don’t come with some downsides.

While utilizing the credit-building services of a brand like Self will almost assuredly improve your credit score and history, the actual effect it has will vary from person to person. This is somewhat expected, though, as not all people have the same circumstances surrounding their credit.

For all the benefits that Self offers, its loan interest rates can be a little high. Although this may not come as a huge surprise given that customers of Self typically have bad credit, these APRs can still have a somewhat strong effect. More specifically, as of August 2020, Self’s APRs range from 15.65% to 15.97%.

How Self Compares to Secured Credit Cards

In addition to credit-building loans, secured credit cards can help you build or repair your credit score. These cards are called “secured” because your credit limit is typically backed by a deposit you make with the credit card company prior to your card being issued. This is done to protect the credit card issuer in the event that you default on your account.

Self’s Credit Builder Account compares quite favorably to secured cards, though. Self does not ask you to make a deposit before your account is activated, while secured card issuers do. The Self Visa® Credit Card also doesn’t call for a deposit, as you can simply use the value you’ve accrued in your Credit Builder Account as backing. These perks could be hugely beneficial for someone with a low credit score, as they may not have the capital to back a secured card.

When it comes to interest rates, Self’s APRs tend to be lower than most secured credit cards. In most cases, the purchase APRs associated with secured cards are 20% or higher, whereas Self’s current APRs are closer to 15%. This shouldn’t come as a massive surprise, though, as card issuers are simply trying to protect themselves from a riskier situation.

Bottom Line

All in all, Self provides those with a weak credit past a great opportunity to improve their credit score and habits. The ability to open a credit-building account without any upfront cash is an extremely attractive benefit as well. While Self’s APRs can get a little steep, managing your account correctly and avoiding extra fees will mean you get to recoup most of your money when your CD account is paid off.

Tips for Managing Your Finances

  • If you’re struggling to improve your credit score but still have some money to invest or save for retirement, a financial advisor could be helpful. Luckily, finding a local financial advisor to work with doesn’t have to be hard. SmartAsset’s free tool can connect you with up to three advisors in your area. Get started now.
  • If you don’t have enough money to work with a financial advisor, consider a financial planner or a robo-advisor. If you’re more interested in building a retirement savings or estate plan, saving money for your child’s college education or minimizing your taxes, a financial planner is your best bet. But if you want to start investing, a robo-advisor can automatically manage your money for you through a portfolio of investments.

Photo credits: Self.inc

The post Self Review 2020: Credit-Builder Loans and Cards appeared first on SmartAsset Blog.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Bad Credit

Home Equity Loan With Bad Credit: Can It Be Done?

Published

on

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Home equity loans let you turn your equity into cash, which you can use to pay for home improvements, unexpected medical expenses, or any other bills you might be facing.

Generally, lenders require at least a 620 credit score to qualify for a home equity loan. If your score isn’t quite there yet, though, you still have options.

Here’s how you may be able to get a home equity loan with bad credit:

  1. Check your credit and try to improve it
  2. Find out your debt-to-income ratio
  3. Find out how much equity you have
  4. Think about bringing on a cosigner
  5. Shop around for the best rates
  6. Consider alternatives to bad credit home equity loans

1. Check your credit and try to improve it

To start, head to AnnualCreditReport.com and pull your credit. You get one free report from all three credit bureaus per year.

Once you have your credit report, check it for errors and evidence of identity theft, such as accounts you don’t recognize and credit cards that aren’t yours. Reporting these to the credit bureau can help improve your score. So can taking these steps:

  • Pay all your bills on time: Payment history — or your track record of payments — accounts for 35% of your score, so make it a point to pay all of your bills on time, every time.
  • Pay down your debts: Lenders want to see a credit utilization rate of 30% or less — meaning your balances account for 30% or less than your total available credit.
  • Keep credit cards open: How long your accounts have been open impacts 15% of your credit score, so avoid closing accounts — even once you’ve paid them off.
  • Avoid applying for new cards: This will result in hard credit inquiries, which can hurt your score.

Learn More: How Your Credit Score Impacts Mortgage Rates

2. Find out your debt-to-income ratio

Lenders will also consider your debt-to-income ratio (DTI) when you apply for a home equity loan. This indicates how much of your monthly income goes toward paying off debt.

How to calculate DTI: Add up your monthly bills and loan/credit card payments, and divide the total by your monthly income. Multiply that amount by 100.

For example, if you have $2,000 in debt payments and make $6,000 per month, your DTI would be 33% ($2,000 / $6,000 x 100).

Most lenders want a DTI of 43% or lower. A low DTI can help improve your chances of getting a loan, especially if you have a lower credit score, since it indicates less risk for the borrower.

3. Find out how much equity you have

How much equity you have in your home, as well as your loan-to-value ratio, will determine whether you qualify for a home equity loan — and how much you can borrow. To find out yours, you’ll need to get an appraisal, which is a professional evaluation of your home’s value. The national average cost of a home appraisal is $400, according to home remodeling site Fixr.

Once the appraisal is finished, you can calculate your loan-to-value ratio by dividing your outstanding mortgage loan balance by your home’s value.

For example: If you have $100,000 remaining on your home, and the appraisal determines it’s worth $200,000, then you have an LTV of 50% ($100,000 / $200,000). This also means you have 50% equity in the home.

Most lenders will only allow you to have a combined LTV of 85% — meaning your existing loan, plus your new home equity loan can’t equal more than 85% of your home’s value.

In this example, you’d be able to borrow $170,000 (85% of $200,000) across both your initial mortgage loan and your new home equity loan. Since your existing loan still has $100,000 on it, that’d mean you could take out a home equity loan of up to $70,000.

4. Think about bringing on a cosigner

Bringing in a family member or friend with excellent credit to cosign your bad credit loan can help your case, too. If you do go this route, make sure they understand what it means for their finances. Though you may not intend for them to make payments, they’re just as responsible for the loan as you.

Tip: If you fail to repay the loan as agreed, it could hurt the other individual’s credit score or result in collections against both of you. Make sure you’re upfront and transparent about what cosigning your loan may mean for them.

5. Shop around for the best rates

A lower credit score will typically mean a higher interest rate, so it’s incredibly important you shop around and compare your options before moving forward. Get rate quotes from at least three to five lenders, and make sure to compare each loan estimate line by line, as fees and closing costs can vary, too.

Credible makes comparing rates easy. While Credible doesn’t offer rates for home equity loans, you can get quotes for a cash-out refinance — another strategy for tapping your home equity. Get prequalified in just three minutes.

Get the cash you need and the rate you deserve

  • Compare lenders
  • Get cash out to pay off high-interest debt
  • Prequalify in just 3 minutes

Find My Loan
No annoying calls or emails from lenders!

6. Consider alternatives to bad credit home equity loans

A bad credit score can make it hard to get a home equity loan — especially one with a low interest rate. If you’re finding it difficult to qualify for an affordable one, you might consider one of these alternatives:

Cash-out refinance

Cash-out refinances replace your existing mortgage loan with a new, higher balance one. You then get the difference between the two balances in cash.

Find Out: Credit Score Needed to Refinance Your Home

Personal loans

Personal loans offer fast funding, and you don’t need collateral either. Rates can be a bit higher than on home equity loans and refinances, though, so it’s even more important to shop around. A tool like Credible can help here.

Check Out: Home Equity Loan or Personal Loan: How to Choose the Best Option

Compare multiple lenders

If you have bad credit, there are still ways to tap your home equity or borrow cash if you need it. Head to Credible to see what personal loan options and mortgage refinance rates you might qualify for. With Credible, you can easily compare prequalified rates from all of our partner lenders without leaving our platform.

About the author

Aly J. Yale

Aly J. Yale

Aly J. Yale is a mortgage and real estate authority and a contributor to Credible. Her work has appeared in Forbes, Fox Business, The Motley Fool, Bankrate, The Balance, and more.

Read More

Source link

Continue Reading

Bad Credit

A Look Back At Housing 2020: Rental Housing Gets Riskier

Published

on

According to the American Housing Survey cited in a recent article, there are about 48 million rental housing units in the United States ranging from single-family homes to large multifamily apartment complexes. Of those 48 million units about 23 million are owned by individuals, according to a recent Rental Housing Finance Survey; that’s more than half of the occupied units in the country. Yet private rental housing providers have been under relentless attack in recent years increasing risks and costs. This has worsened in 2020 as I have pointed out. More risk means fewer housing units and higher prices, not a good outlook for the future.

Any business based on renting assets is based on risk. Think about the last time you went bowling. When you rent the shoes, the person behind the counter often will hold a driver’s license? Why? It’s a way of offsetting the risk that you’ll go home with the shoes either on purpose or accidentally. Nobody wants to deal with a lost driver’s license. Offsetting this risk has absolutely nothing to do with you or your trustworthiness; it is uniformly applied and routine.

Housing providers have to similarly offset the risk of allowing a stranger occupy their private property. There are several ways of doing this, including using credit checks. But lately, politicians are beginning to eliminate the credit check from the tools that housing providers can use to offset risk. Minneapolis for example has eliminated credit checks arguing that they are a “barrier” to housing.

Is race a factor in bad credit and thus a barrier to people of color to get housing? The fact is, yes, African American people have more credit issues. But would eliminating credit checks help them? The answer is, “No.”

An article in the Washington Post, “Credit scores are supposed to be race-neutral. That’s impossible,” is emblematic of how this issue plays among the public and policy makers. The author says two contradictory things. First,

“This would lead one to think that credit-score calculations can’t be biased. But factors that are included or excluded in the algorithms used to create a credit score can have the same effect as lending decisions made by prejudiced White loan officers.”

Then she writes,

“One quick way to impact your credit history is a court-ordered judgment. And Black borrowers are more likely to fare badly when taken to court by their creditors. Debt-collection lawsuits that end in default judgments also disproportionately go against Blacks, according to a 2020 Pew Charitable Trusts report.”

Logically, the right way to state this is that credit measures are biased against people who have default judgments against them, and African Americans have higher rates of defaults. Then the next question would be, “Why?” The most obvious answer is the right one, poverty is disproportionately concentrated among people of color.

But eliminating credit checks for housing won’t help that problem. If a housing provider is unable to evaluate risk based on past financial performance her only option will be to raise rents and deposit amounts in case there is a problem; that extra cash would provide a buffer if a resident stops paying rent. This won’t help anyone with less money. What’s the response to that? Ban rent increases by imposing rent control! That’s a bad idea too and won’t help either.

The answer is to figure out how people who have less money and therefore have more issues making ends meet can solve that problem and improve their credit scores. The author of the Washington Post article makes a sensible suggestion: include steady rent payments in credit scores. Some housing providers do, and it’s a great idea. But it is a positive one that actually helps the family; banning quantitative measures of past financial performance doesn’t.

The danger that unfolded in 2020 is that justifiable outrage about racism could lead to interventions that don’t address poverty and it’s negative consequences like default judgments but elimination of accepted measures of those consequences. Eliminating the evidence of poverty – struggling to pay bills – doesn’t help pay the bills! At best, these kinds of measures sweep the problem under the rug ensuring higher rents and making housing a risky business only big corporations will be able to do.

The answer is to address the broader underlying issues of poverty and increasing housing production. When there is more supply of housing providers compete with providers for residents and will be forced to bargain with potential residents, even those with dings or dents or completely destroyed credit. Housing abundance solves a housing problem while eliminating measure of risk only makes that risk higher and actually creates a housing problem.

Source link

Continue Reading

Bad Credit

Can My Cosigner Take My Car?

Published

on

Cosigners don’t get any rights to the vehicle they signed the loan for. However, if the cosigner is trying to take your car, it may be time to take some action.

Cosigners and Ownership

Can My Cosigner Take My Car?Cosigners can’t take the vehicle they cosigned for because their name isn’t listed on the title. A cosigner isn’t responsible for making the monthly payments, maintaining car insurance, or really anything else. Cosigners simply lend you their good credit score to help you get approved for the auto loan, and if you can’t make payments, the lender can require them to pick up the slack.

Since you’re the primary borrower on the vehicle and your name is listed on the car’s title, you have ownership rights. Your cosigner can’t come to your residence and take possession of the vehicle – even if they’re the one making the car payments right now.

If you do default on the loan and the vehicle is repossessed, the cosigner still can’t take the car.

But My Cosigner Did Take My Car!

If your cosigner did somehow take your keys and your vehicle without permission, it’s considered theft. If you want to take action, you can report the car as stolen.

However, a better first step is probably contacting the cosigner and letting them know that they don’t have any ownership rights (if you want to maintain a relationship with them). You can ask them to return the vehicle and explain that their name isn’t on the title.

Removing a Cosigner From a Car Loan

If things are dicey with your cosigner, then it may be time to consider removing them from the auto loan. The easiest way to remove a cosigner is by refinancing.

Refinancing is when you replace your current loan with another one. You can work with your current lender or another one, but most borrowers look for another lender to refinance with.

You don’t need a perfect credit score to refinance your car loan – it just has to be good or better than it was when you first got the loan. Another common requirement of refinancing is that you’ve had the loan for at least one year.

Other common requirements for refinancing are:

  • You’ve stayed current on payments throughout the loan
  • You have equity or your loan balance is equal to the vehicle’s value
  • Your car has less than 100,000 miles and is less than 10 years old

Most borrowers usually refinance to lower their loan payments. Since you’re replacing your current auto loan with another one, many borrowers try to qualify for lower interest rates or extend their loan to lower their payments. If your credit score has improved, you may even be able to get a better interest rate and remove your cosigner!

Can’t Refinance to Remove the Cosigner?

Refinancing isn’t in the cards for everyone. However, another efficient way to remove a cosigner is by selling the car. Cosigners don’t have to be present at the sale of the vehicle, since they don’t have to sign the title to transfer ownership.

If you sell the car and get an offer large enough to cover the entire balance of your loan, you and the cosigner can walk away from the auto loan scot-free.

However, many borrowers need cosigners because their credit score isn’t the best. If you want to sell your vehicle to remove your cosigner, but you’re worried you can’t get a car loan by yourself, consider a subprime auto loan for your next vehicle.

Bad Credit Auto Loans

Since many traditional car lenders don’t work with borrowers who have poor credit histories or lower credit scores, they often ask them to bring a cosigner. But what if you don’t want a cosigner (or can’t get one) on your next auto loan? Enter subprime car loans.

Subprime lenders are teamed up with special finance dealerships, and they operate remotely. When you apply for financing with a special finance dealer, you work with the special finance manager who acts as the middleman between you and the lender.

You need documents to prove you’re ready to take on an auto loan – typical things like check stubs, proof of residency, valid driver’s license, a down payment, and other assorted items depending on your credit situation. If you qualify, the lender determines what your maximum car payment can be, and you choose a vehicle you qualify for from there.

What sets subprime auto loans apart from traditional car loans is that they assist borrowers in tough credit situations and offer the opportunity for credit repair. Some in-house financing dealerships that don’t check credit reports don’t report their auto loans, which means your timely payments don’t improve your credit score.

Finding a Car Dealership Near You

The best way to improve your credit score is by paying all your bills on time. Payment history is the most influential piece of the credit score pie. There are many lenders willing to work with bad credit borrowers, you just have to know where to look!

Here at Auto Credit Express, we’ve already done the searching, and we’ve created a nationwide network of dealers that are signed up with subprime lenders. Get matched to a dealership in your area, with no cost and no obligation, by filling out our car loan request form.

(function(d, s, id){ var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) {return;} js = d.createElement(s); js.id = id; js.src = "http://connect.facebook.net/en_US/sdk/debug.js"; fjs.parentNode.insertBefore(js, fjs); }(document, 'script', 'facebook-jssdk'));

Source link

Continue Reading

Trending