How to Compare Credit Builder Apps in 2023

How to Choose the Best Credit Builder App

Credit builder apps all seem to offer a chance to get a higher credit score within a few weeks of signing up for the service. And that’s because there isn’t a big secret to improving your credit.

Adding new credit accounts to your credit reports and making on-time payments will often improve your credit scores, and all the best credit building apps make this easier to do. If you can also decrease your credit utilization ratio—the percentage of your revolving credit limit that you’re currently using—that might also increase your score quickly. 

But even if some of the mechanisms for building credit are similar, the costs, services, and customer experience can be very different, which is why comparing credit builder apps is important. 

Why is rebuilding your credit important?

From having trouble qualifying for an apartment to getting stuck with high-cost loans and credit cards, a low credit score can be frustrating and expensive. But we probably don’t need to tell you about all the ways bad credit can make life difficult. 

 

Whether you’re building credit for the first time or rebuilding your credit, it might be months or years before you’re in the 800-plus club. However, credit building apps can help by giving you the tools to quickly add new, positive information to your credit history. 

Even a modest score increase might help you qualify for better credit cards and lower-rate loans, and these early wins can start stacking up as you stick with the program.

Top features of credit building apps

Credit building apps may offer various features and benefits. Some of these are the basic non-negotiables. For instance, if you’re not adding new information to your credit reports, your score isn’t going to change. Others are nice-to-have extras that can help you understand how to grow credit faster.

Tri-bureau reporting 

Your credit scores are based on the information in your credit report from Equifax, Experian, or TransUnion. But some credit building apps only report information to one or two bureaus. 

Creditors can choose which credit reports and scores to use when doing a credit check, and you won’t necessarily know which report the creditor will review to make a decision. With this in mind, ideally, you can find credit building apps that report your new accounts and information to all three major credit bureaus. 

Several types of credit accounts

Credit builder apps may offer up to three ways to improve your credit:

  • A credit builder loan
  • A credit card for credit building
  • Reporting nontraditional credit data, such as rent and streaming service payments, to your credit reports

Try to find a credit builder app that offers at least a loan and credit card with a single subscription. Having multiple accounts with positive payment histories can help your credit scores, as can having an open loan and credit card. And many credit builder apps don’t require a hard credit inquiry, which means applying for an account won’t hurt your credit score.

Credit monitoring

You may want to monitor your progress as you rebuild your credit, and some credit builder apps include credit report or score monitoring as a free feature. (Credit repair companies may suggest you sign up for a separate paid credit monitoring service—they often get a kickback when you use the one they suggest.)

Personalized recommendations

Credit scores come with reason codes that indicate the four or five things that are hurting your credit score the most. Credit builder apps can use these to offer personalized advice for improving your credit. Some apps also review your credit profile to provide additional recommendations. 

Credit simulators

You also might want to see how your credit score could change based on different actions, such as opening a new credit card or using a debt consolidation loan. Credit score simulators can help, but remember these are only estimations of your score changes. 

Educational resources

Learning about how credit works can help you avoid mistakes along the way and understand why a credit builder app suggests certain things, such as using a small percentage of your credit card’s balance. 

How to select the right app for your needs

There are many credit builder apps available, including options from credit bureaus, banks, large financial institutions, and small fintechs that solely focus on credit building. When comparing the options, consider:

  • Features: Make sure the app includes the features that you need or want. At a minimum, try to find an app that reports to all three credit bureaus and offers multiple types of credit accounts. 
  • Cost: There’s often a monthly fee, and you may be able to save money by signing up for an annual membership. Free credit builder apps and credit monitoring tools can be helpful, but they often don’t work with all three major credit bureaus. 
  • Reviews: Look for customer reviews from services like Trustpilot to learn about other people’s experiences with the app. 
  • Privacy and security: Review the company’s privacy and security policies because you’ll often need to share your personal information. If the app supports multifactor authentication (MFA), enable it to help keep other people from logging into your account. 
  • User Interface: Check out the company’s website and app to get a sense of how easy it will be to navigate and understand the service. 

The future of credit building

As people become more aware of how important a good credit score can be, they’re also looking for ways to build and improve their credit quickly. 

Financial institutions might offer credit building installment loans as ancillary financial products. And some have secured credit cards that require a security deposit, which often leads to a low credit limit that can make it difficult to keep your credit utilization. These accounts also often have high fees and interest rates. 

Credit building fintechs are changing things by bringing competition to the credit building space. As a result, there’s a focus on customer experience that’s increasing the quality—and decreasing the price—for consumers. 

That’s where we saw an opportunity to make a difference with Ava. By offering a credit building loan and a high-limit revolving credit card, we give people two accounts that can help them improve their credit scores and financial situation. And we did away with sneaky fees and interest altogether in favor of a transparent monthly subscription. 

Learn more about how Ava helps you build credit.

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