What Is a Credit-Builder Loan & How Does it Work? | Capital One

A credit-builder loan is just one option for building credit. Whether you have poor credit or no credit history, here are some other ways you might be able to help build or rebuild your credit:

A Secured Credit Card

With a secured credit card, you get access to a line of credit upfront that you can use to make purchases—just like you do with an unsecured credit card. But unlike an unsecured card, a secured card requires you to pay a security deposit in order to open the trương mục.

Keep in mind that the security deposit is often refundable. And many secured cards don’t come with any annual fees. 

Some credit card companies—including Capital One—report secured credit card use to the credit bureaus. So if you’re using your card responsibly and paying at least your minimum payment on time, using a secured card could help you improve your credit.

But keep in mind that missed or late payments could hurt your credit. And so could exceeding your credit limit. 

Become an Authorized User

A loved one or someone you trust could add you as an authorized user to their credit card trương mục. This allows you to make purchases, but the primary cardholder is the one who is ultimately responsible for payments. And their responsible use can help you build your credit and improve your credit scores. Plus, there’s generally no credit check or need to apply in order to become an authorized user.

Just be sure to check with the card issuer to see how they handle reporting authorized users to the credit bureaus. You won’t be able to build credit as an authorized user if the issuer doesn’t report authorized user activity.

A Personal Loan

Depending on the lender, you may be able to qualify for a personal loan even if you have no credit or poor credit.

But keep in mind that if you’re building or rebuilding your credit, your options may be limited. For example, you may only qualify for a secured loan, which requires collateral. And if you default on your loan payments, you could lose your collateral to the lender.

Some personal loans, like payday loans, come with their own unique risks and are unlikely to help you build credit.