The best credit builder loans for (August 2022)

We know that establishing a healthy credit score feels difficult, but anyone can do it with the right information, planning and determination.

Do you know that it is possible to take out a secure loan for credit building? Keep on reading to learn how credit building loans can help you on the path to a better credit score.

CompanyProgramRequirementsBenefitsReviewSubscription KOHOKOHO


Koho pays your line of credit on your behalf


  • $7 per month for 6 months (renewable)
  • $42 upfront for 6 months

– Legal age 18 
– SIN number
– Have a KOHO card (free) 

Increase your credit score by 20 points on average in 6 months 

Check your credit score evolution live on the KOHO app

No credit history required

No need to apply for any other KOHO program 

Safe, easy and affordable tool for building your credit score


All your payments are reported to TransUnion to increase your score.

Sign up with “HELLOSAFE” code and get $20


Refresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit Score

Sprint pack

Credit builder loan and

secured credit card

Based on your loan size:

$21.44 to $122.25 biweekly

Duration: 36 to 60 months 

Interest rate: 19.99% 

– Legal age 18 
– Permanent resident in Canada
– Have an active bank account
– Proof of monthly income 
– Provide a security deposit

Automated payments are applied to your loan balance

Monthly or bi-monthly payment schedule

Paying off a refresh financial credit builder loan will help you quickly build your credit



Refresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit Score

Jog pack

Credit builder loan only 

Based on your loan size:

$21.44 to $122.25 biweekly

Duration: 36 to 60 months 

Interest rate: 19.99% 

– Legal age 18 
– Permanent resident in Canada
– Have an active bank account
– Proof of monthly income 
– Provide a security deposit

Make payments into a secured account 

You can access it at any point to withdraw your savings 

Your payments are reported to the credit bureaus

No credit history required 

This “set it and forget it” option is the perfect solution to build your credit almost effortlessly.


Refresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit ScoreRefresh Financial | Improve Your Credit Score

Walk pack

Secured credit card only

Annual fee: $12.95/year

Maintenance fee: $3.00/month

Interest rate: 17.99%

– Legal age 18 
– Permanent resident in Canada
– Have an active bank account
– Proof of monthly income 
– Provide a security deposit

The amount of credit available to you is equal to the security deposit.

The security deposit is refunded to you when you cancel your card

Helps you improve your credit rating by building a positive payment history

The Refresh Financial Secured Card is a great option for anyone who has bad or no credit and is having trouble getting approved for a credit card. It’s very easy to qualify for and works like a





Credit repair programs

What is a credit builder loan?

In a traditional loan, you typically receive the amount you are borrowing upfront and then pay the loan back in installments over the course of an agreed time frame. A credit building loan, however, reverses the process. 

You make regular payments to “pay” your credit builder loan. These are reported to credit agencies. Once the loan is completed, the lender releases your funds back to you. It is a way of saving and improving your credit. 

They are mainly provided by smaller financial institutions like credit unions and private lenders, but online credit repair companies are an increasingly popular option. Whomever the lender, these loans help people with weak credit scores or no credit history to establish a solid financial record. 

How do credit builder loans improve your credit?

Credit builder loans help you improve your credit score because the lenders report all of your on-time payments to the credit bureaus.

As soon as you get approved for a credit builder, you must begin making payments and every on-time payment you make will be reported to the credit bureaus. Your credit score will rise of this positive payment history. This makes it simpler for you to get more conventional types of financing in the future. 

Who offers credit builder loans?

If you are wondering where to find a credit builder loan, we got you covered. There are three categories of lenders that offer credit building loans in Canada: 

  • Credit unions
  • Big banks
  • Online lenders

To make it even simpler, we list the best credit building loan providers in Canada below


Here’s how Refresh Financial Credit Builder Loan work: 

  • An interest rate of 19.99%
  • Variable loan amount: Canadians (but not Saskatchewan residents) are eligible to borrow between $1250 and $10 000
  • Flexible loan conditions: The length of the loan is three to five years 
  • No credit check
  • Access to a learning portal: Refresh f.i.t is an online learning resource that offers free access to money management advice, including details on finances and money and suggestions for raising your credit score.


The KOHO credit building loan has the features listed below:

  • You can have payments as low as $7 per month.
  • You will be able to view your most recent credit history each month when they have successfully received your payment and reported it to a major credit bureau.


The BMO credit builder loan program has the following characteristics:

  • Low expense and low risk: You can ask for a loan of as little as $1000. You will receive affordable payments with a lot of opportunities to improve your credit.
  • There is no required minimum credit score required: Even if you have a poor credit score or no credit history, you can still be qualified.
  • Fees: Although there is no charge for paying off and ending the loan early, there is a $75 loan processing fee.


The Fairstone credit-building loans have the following features:

  • Free loan estimate: By providing some basic information you can quickly receive a loan quote.
  • Inexpensive payments: Choose from monthly, semi-monthly or biweekly payments for a payment schedule that fits your needs, financial situation and lifestyle.
  • Personalized service: You will receive individualized attention from a skilled lending specialist whether you apply for a loan online or in person.
  • Branches from all over Canada:  With more than 240 locations across Canada, there is probably one close by for all of your banking needs. 


The following benefits apply to the spring financial credit building loan, named The Foundation:

  • Improve Your Credit:  Over the course of a year, make tiny payments that are each recorded to the credit bureaus. 
  • Increase savings:  You will have $750 accessible in savings at the end of a year. 
  • Automatically be eligible for an Evergreen Loan of $1500: After finishing The Foundation, you will have access to the $1500 Evergreen Loan, which has an interest rate of 18.99%. You can spend the money however you choose and keep improving your credit.

You can compare the best credit builder loans here:

Shop credit builder loans now

Better credit starts here

How long does it take to improve my credit?

If you are actively trying to raise your credit score, it could take as little as three to six months before you start noticing a difference. Your consistent repayment of any loans or credit cards you may have is rapidly reflected in these developments. 

However, it typically takes six years of consistently paying bills on time for a very low credit score to improve to an excellent one. The earlier you start, the better. you can start by taking small measures to raise your score, and over time, it will get better.

Some financial programs like credit builder loans and secured credit cards can help you improve your credit even faster. 

Pros and cons of a credit builder loan:

Getting a secured loan for credit building may seem like the ideal solution for your financial strategy, but keep in mind that every decision has advantages and disadvantages. Therefore, we highlighted the greatest benefits and drawbacks of this form of credit in order to make it simpler for you to decide whether taking out a credit building loan is the best decision for you.


  • It helps you establish or repair your credit history: As you make on-time payments, your credit score will increase. 
  • It opens up better rates for you: You’re more likely to qualify for competitive interest rates on future traditional loans as your credit score rises. 
  • It allows you to increase your savings: When you make your final payment, you’ll have access to a lump sum of money that can be transferred into your savings.
  • It teaches you how to set up a spending plan: Getting a credit builder loan might assist you in developing strong budgeting and saving practices.
  • No money down is needed: Credit builder loans don’t require a deposit to get started, so you won’t have to pay much to get one (note: some companies do apply small fees)
  • No collateral: You to put up an asset like your house or car as collateral like you would with a secured loan. 


  • Small amounts: A loan for building credit often varies from $500 to $5000. 
  • Short loan repayment term: The majority of credit builder loans must be repaid in less than two years or within a few months. 
  • High interest rates: You may have to pay interest rates of between 10% and 30%. 
  • Funds blocked until loan repaid: You won’t have access to your money yagain until your credit building loan has been fully paid. This makes for a nice saving option, but it is not a lending solution.
  • Additional fees: You may pay more than the initial loan amount after expenses like setup and administrative costs or even a late fee in case you don’t make your payments on time.
  • Missed payments are also reported: If you make late payments, these will also be reported to the credit bureaus, which could lower your credit score.

Who should get a credit builder loan?

Credit builder loans are intended for people who have bad or no credit and are seeking a solution to improve it. Therefore, if you already have strong credit, a credit-building loan is not necessary. You are taking good care of your credit history, just continue on that path. 

However, not everyone with bad or no credit should apply for a credit building loan. While it might be a good way to establish credit, if you have trouble making your payments on time, it could work against you and further drop your credit score.

Before signing up for a credit builder loan be 100% certain that you can make the payments in full and on time.

How to qualify for a credit builder loan?

It doesn’t matter if you have a poor credit history, a strong credit history or no credit history at all. Most people qualify for credit builder loans.

But while applying for a secure loan for credit building, keep in mind that they do require that you are able to make the payments on time, and for that the lender will look into several criteria:

  • Your income
  • Your existing loans and debts
  • How you currently handle your debts.

How else can I improve my credit?

If you either have a low credit score or no credit history at all, don’t panic. There are other strategies for you to build up stellar credit.

Besides applying, getting and successfully paying off a credit builder loan, here are several ways you can improve your credit score.

Ways to enhance your credit scoreExplanationAdding yourself as a family member’s authorized user on their credit card Ask a family member with a high credit score whether they would be willing to add you as an authorized user on their credit card. This allows you to piggyback off of their good credit score to improve your own credit. By doing this, their payments on their credit card will be included in your credit report.Getting a secured credit cardA deposit is used to secure a secured credit card, which is typically equal to the credit limit and it will be returned when you end your account. You can use your secured credit card just like a regular credit card and your credit can get better if your secured credit card provider reports your payments to the credit bureaus.Guarantor LoanA great approach to improve your chances of being accepted when applying for a credit product is to have a family member or significant other sign on as a guarantor. Additionally, you’ll improve your chances of qualifying for a lower interest rate or better terms.Financial technology solutionsThere are many apps and websites that help you track your spending patterns and keep a close watch on your credit.Maintain a modest credit use rateIdeally, you should not use more than 30% of your credit limit. It’s best to keep all of your credit card balances well below their limit.Keeping up with your bill payments Your payment history is reported to the credit bureaus by a variety of sources, not just credit card issuers. While phone and utility companies will record if you fall behind on your payments, lenders will report both on time and missed payments.Keeping your previous credit accounts openIt’s preferable to keep credit accounts open unless you have a valid reason to close them since doing so could harm your credit scores. The entire duration of your credit history, or how long you’ve been a credit user, is one of the many variables considered to calculate a credit score. therefore, cancelling an old account may decrease your credit history and may have a bad impact on the health of your credit.Strategies: how to improve your credit score

Credit builder loans vs secured cards:

Obtaining any form of credit can be difficult if you have bad credit or no credit history. Building your credit is a step toward a brighter financial future in both situations. Fortunately, financing options like secured credit cards and credit builder loans can assist you in establishing or rebuilding your credit. Which one could be more effective for you? This depends on a few variables.

AboutCredit Building LoanSecured Credit CardEstablish or boost your credit score

Immediate access to funds

No upfront deposits

Approval even with a bad credit score

Approval regardless of personal income

InterestAs low as 4.10%between 10% and 30%Credit builder loans vs secured credit cards