Credit Strong Review (2020)

When I walked into FinCon 2018, I had never heard of the concept of a credit builder loan. Thus my mind was slightly blown after I discovered Self Lender (now known as Self). Funny enough, this past year’s FinCon introduced me to another credit building loan company: Credit Strong.

Like with Self, Credit Strong features a number of loan options to meet the needs of different individuals. What’s more, the company also offers some unique accounts that provide even more potential paths for those in need of some credit. So how does it all work? Let’s take a look at some common questions about Credit Strong and review their current credit builder loan account line-up.

What is Credit Strong and How Does it Work?

Is Credit Strong legit?

Credit Strong is a division of Austin Capital Bank. As their site notes, the bank is a “5-star rated FDIC insured Texas State Savings Bank.” Being FDIC-insured is not only important as there is a saving component to their loans (more on that later) but it also means that the company is subject to a high-level of oversight and regulation. In other words, yes, they are legitimate.

How does Credit Strong work?

The company offers what is commonly known as credit builder loans. Instead of a traditional personal loan where you receive the funds your borrowing upfront, Credit Strong places your loaned funds into a savings account that is only unlocked once you’ve paid in full. While this might seem like a strange way to save, the actual purpose is to help establish a positive payment history, which could lift your credit score. To help achieve this goal, Credit Strong reports to all three major credit bureaus (TransUnion, Equifax, and Experian).

How much can Credit Strong help raise my scores?

Obviously the big question surrounding credit builder loans is “how much of an increase is possible?” Unfortunately there are far too many factors at play (including your starting score, length of your loan, etc.) to truly give an answer. However, since payment history accounts for 35% of your FICO credit score, making on-time payments on your Credit Strong account should definitely help.

Are there restrictions on who can use Credit Strong?

In order to apply for a Credit Strong account, users must:

  • Be at least 18 years old

In terms of approvals, Credit Strong says that they “use a database of past bank account behavior to determine your eligibility for the Credit Strong account.” They also explicitly state that they do not use your credit score in their decision process and that there is no minimum income requirement.

Also of note, Credit Strong accounts are currently unavailable for those in North Carolina, Wisconsin, and Vermont.

Will applying for Credit Stong impact my credit score?

The company does not perform a hard inquiry on your account, however they do note that some users may see a slight dip due to their age of credit decreasing. However they write, “In this case, it’s typical for your credit score to quickly rebound and increase with on-time payment history for the Credit Strong account loan.”

Can I pay off my Credit Strong loan early?

Individuals are welcome to pay back their Credit Strong loan early and will not incur any penalties for doing so. That said it is worth noting that doing so will result in a truncated payment history, meaning that individuals might not get the full benefit of what the account is intended for.

How does Credit Strong compare to Self?

While Credit Strong and Self both offer similar products, there are a couple of notable differences. For one, while Self places funds into a certificate of deposit (CD), Credit Strong utilizes savings accounts. The latter notes a Savings Interest Rate of 0.2%, however I’ve been unable to find information on how much Self’s CDs generate in interest, so it’s hard to say if there’s a real differentiation here.

Previously, another difference between the two was the administrative fee the two services charged. Self currently charges a one-time administration fee of $9 for all of its loans (down from the previous $15 loan fee). Meanwhile some Credit Strong options still charge a $15 admin fee, others are $8.95. I can’t help but wonder if Self lowering their fee has anything to do with Credit Strong giving them competition — but I digress.

Finally, Credit Strong recently introduced some new credit building account options, which we’ll discuss more in the next section.

Credit Strong Account Options and Pricing

Like with similar services, the amount you pay for a Credit Strong account will depend on which option you choose. On top of that, looking at their FAQ, it seems Credit Strong only recently switched up their account options. Previously the service had a total of six offerings with terms ranging from 12 to 24 months and monthly payments between $24 and $150. Now this line-up has expanded to eight products, with some taking on a slightly different structure.

Before we take a closer look at each set of plans, this helpful chart from Credit Strong will help you better understand the costs associated with each:

Subscribe 1000 and Subscribe 2500 plans

Those in search of a low monthly payment may be interested in Credit Strong’s Subscribe 1000 or Subscribe 2500. As these names imply, the former shows as a $1,000 loan on your credit report while the later shows as $2,500. These accounts allow customers to build up to 120 months of payment history for $15 or $30 a month respectively plus a one-time $15 admin fee.

I’ll admit that I was a bit confused by this option at first. For one, Credit Strong says that these options have “X Credit Line Reported.” This made me wonder if it would show as revolving credit or an installment loan on your credit report. However, after using the site’s chat function to ask about this, I was informed that all plans will show as installment loans from Austin Capital Bank.

The other part that confused me was, if you were paying $15 a month for 120 months, you’d end up spending $1,800 on what is actually a $1,000 loan. As it turns out, that’s where the “Subscribe” title plays a role. Plus, as was pointed out to me, 120 months is 10 years — which is a heck of a long time. In my view, it probably doesn’t make sense to actually pay on this account for 10 years but, instead, pay $15 a month for as long as you need to reach your realistic credit goal. By the way, Credit Strong notes that you can cancel anytime without penalty.

When you do cancel, you will receive back some of the funds you paid in, although you will of course be paying interest on the loan. Thus, as Credit Strong shows on their pricing table, 24 months of Subscribe 1000 will find you paying $360, with only $110 of that going toward your savings. This amounts to a 13.5% APR. Meanwhile the Subscribe 2500 is a bit better in terms of interest, carrying a 7.89% APR. As a result, your savings after 24 months will be $358 (and you’ll have paid $720).

Build & Save Plans

For a more traditional credit builder loan option, Credit Strong offers three “Build & Save” plans. This includes a 12-month Build & Save 1000 account, a 24-month Build & Save 1000 account, and a 24-month Build & Save 2000 account. Each requires a one-time admin fee of $8.95 and, as you can guess, have loan amounts of $1,000 and $2,000. This puts the 12-month Build & Save 1000 account’s monthly payments at $48, the 24-month’s at $89, and the Build & Save 2000’s at $96.

Magnum Plans

Lastly, Credit Strong’s three Magnum plans are similar to the Subscribe options but feature much larger credit limits. How much larger? Up to $18,000 with the Magnum 18000 account. If that’s a bit much, there’s also a Magnum 4500 and Magnum 9000. In terms of pricing, the 4500 is $49.50 a month, the 9000 is $99 a month, and the 18000 is $198 a month. These options are also available for terms of up to 120 months and have a one-time fee of $25.

Previously, Credit Strong had Magnum plans in denominations of 5000, 10000, and 25000. Additionally the pricing on those options were slightly more favorable than with the current line-up. I’m not quite sure what led to the change but I’m sure they know what they’re doing.

On their site, Credit Strong notes that these options can “Supercharge your personal credit for commercial purposes.” It’s also worth noting that these plans bear the lowest APRs, ranging from 5.83% to 5.92% depending on which you choose. Plus, like with the Subscribe plans, you can cancel at anytime penalty-free.

Final Thoughts on Credit Strong

Like with Self, I think a credit-building loan from Credit Strong could be a good option for those who want to rebuild or establish credit. However I would advise potential customers to be mindful about the price they’ll pay for this service and carefully consider which option is best for them. For example, those willing to simply pay a monthly fee to help build their credit might like the low payments and flexibility of the Subscribe plans. Meanwhile those looking for a more traditional credit builder loan experience and want to amass some savings in the process might opt for the aptly-named Build & Save plans.

With the ability to pay off your loan early without penalty, establish payment history with all three major credit bureaus, and considering Credit Strong’s backing from a legitimate bank, those looking to rebuild their credit or establish some for the very first time might find Credit Strong’s accounts well worth the investment.

Originally published at Dyer News.