An innovative loan program designed to build or rebuild your credit
UCCU’s Credit Builder Loan is a loan designed for any 16 and older to build or rebuild credit. This loan program displays your ability to make consistent payments on time, over time to raise your Credit Score.
You don’t need a good credit score to qualify for Credit Builder. In fact, that’s the whole point. UCCU will open an account in your name, and then provide that account with a fixed amount of funds, along with a small, automatic monthly payment. Just sit back, relax, and let your Credit Build.
Why Open a Credit Builder Account?
It’s easy to open a Credit Builder Loan either for yourself or a child 16 and older (loans for users under 18 require an adult cosigner). That way, those enrolled in the program will have an already established credit history and good credit score. This can help limit the need for future cosigners when they are looking for an car or home loan. A good credit score can save users a lot of money.
What if I Need to Repair Credit?
If you are looking to repair a negative credit history, then a Credit Builder Loan is a great place to make automated payments over time that will increase your credit score.
Frequently Asked Questions
What is Credit?
“Credit” is the ability to borrow money from an institution with the understanding that you will pay it back in full at a future date. While people often associate credit with an actual credit card, there are many different types of credit. The two most common types are Installment Loans and Revolving Credit.
– Installment Loans: this is a set amount of money loaned to you for a specific purpose such as a student loan or auto loan.
– Revolving Credit: this is a line of credit you can keep after paying it off as long as you stay under the credit limit allotted. The most common forms of revolving credit are credit cards
What is a Credit Score?
A credit score is a universal financial tool used by creditors to predict how likely you are to pay off your credit (i.e., debt). This score is therefore measured in a three-digit number typically ranging between 300-850. The higher your credit score, the stronger your credit. There are multiple factors that determine your credit score, including payment history, length of credit history, amounts owed, new credit, and credit mix.
What are ways I can increase my credit score?
There are many ways to increase your credit score, so here are three of the most effective:
Don’t miss payments
35% of your credit score is based on historical payments.
Don’t max out your credit limit
Keep the use of your credit at or below 30% of your total borrowing limit. borrowing above the 30% can have a negative impact on your overall credit score.
Pay Down Existing Debt
Creditors like to see progress rather than the user moving debt from one spot to another.
What are Interest Rates?
“Interest” is the cost of borrowing money. Every type of credit will come with types of interest rates that will determine the cost of using the credit. Lenders will then calculate the average daily balance on your account and apply an interest fee on a monthly basis. All credit cards will subsequently have different interest rates depending on the financial institution and terms and conditions associated with the card.
Can I avoid interest and fees on credit cards
Yes! Many types of credit cards have annual fees attached to them just to use their card, but not at UCCU! Most card issuers, including UCCU, give their members a grace period to pay off their balance without interest. These periods typically last between 1-4 weeks from the time you receive your billing statement. If you pay your bill in full during this time, you will avoid the interest (while also earning possible rewards for using the credit card).
Where can I learn more about all things credit?
UCCU has experts available to help answer any questions you may have. They can also provide you with best practices based on your personal financial situation. Call or visit any UCCU branch to talk with an expert today.
How does UCCU’s Credit Builder Work?
UCCU Credit Builder is an innovative loan program designed to help you build or rebuild a credit history and score by making on-time loan payments. It is important to note that Credit Builder is not a credit card and can be opened at age 16 and older (cosigner required for applicants under 18 years old).
A credit score is important to qualify for home loans, auto loans, credit cards and a whole lot more. A high score will save you a lot of money in lower interest rates as a result of you taking the initiative to grow your credit score with a UCCU Credit Builder Loan.
How does UCCU Credit Builder Work?
UCCU will lend you a fixed amount of money with a small monthly payment, and then place those funds into a special savings account that will be used to make your monthly payments. As your monthly payments are made, your credit history builds.
Simply put, Credit Builder is the fast-track way to building or rebuilding your credit.
Customize Your Credit Builder Loan
Your Credit Builder Loan can be customized to fit your needs. A UCCU loan expert can help determine which loan amount and duration works best for you.
Loan Amount: UCCU will deposit between $500 and $5,000 into a Credit Builder savings account that will be used to pay off your Credit Builder loan.
Loan Duration: You can choose a loan duration between one and five years. A longer loan duration comes with a lower monthly payment, as well as more time to build your credit history. A shorter loan duration enables you to pay off the loan faster and save on interest.
Every Credit Builder comes with a low-interest rate, which results in a small amount of interest you’ll be required to pay off over the duration of the loan.
For example, let’s say you open a Credit Builder in the amount of $1,000, with a loan duration of two years, and the interest rate is 6.00% fixed APR. With this scenario, you would pay a total of $24.95 in interest as part of your Credit Builder Loan.
Credit Builder Accounts
Due to the unique nature of this loan program, opening a UCCU Credit Builder requires opening two new accounts:
Credit Builder Loan Account: This is your actual loan account, where you will make your Credit Builder monthly payments to.
Credit Builder Savings Account: After you open your Credit Builder, your funds will be deposited and frozen inside a Credit Builder savings account. UCCU will automatically unfreeze the portion of the funds each month to be used to make your monthly payments until your loan is repaid in full.
Both accounts are easy to view anytime inside UCCU’s digital banking.
What is the Initial Deposit?
UCCU will lend you the money to pay back the loan.
If you took out a $1,000 UCCU Credit Builder Loan, then UCCU would give you $1,000 into your Credit Builder Savings Account to pay back the $1,000 Credit Builder Loan.
You will be required to make an initial deposit in the amount of two-month’s payment at account setup. These funds will be used to pay off all of the interest associated with your loan.
Let’s continue with the example of a Credit Builder Loan in the amount for $1,000 with a loan duration of two years, and an interest rate of 6.00% fixed APR. With this scenario, you would have a monthly payment of $44.32, which would require an initial deposit from you of $88.64.
Beyond the initial deposit, your Credit Builder comes with no out-of-pocket costs to you.
If you are looking to repair a negative credit history from late payments or judgements additional out-of-pocket expenses may apply.
What are my options for payment methods?
UCCU Credit Builder comes with two options for making your monthly payments:
Automatic Payments: Making on-time payments is one of the most important things you can do to raise your credit score. That’s why we recommend setting up automatic payments. It’s simply the best way to be sure you never miss a payment.
Manual Payments: You can also make manual payments each month by calling UCCU or stopping by any branch during regular business hours.
What happens after my Credit Builder Loan is paid off?
Once your Credit Builder Loan is paid off, any remaining funds in your Credit Builder Savings account will be unlocked and be made available to you.
How can I open a Credit Builder Loan?
You can open a Credit Builder over the phone (801) 223-8188, or by stopping by any UCCU branch. Approval is fast and easy, regardless of your income or employment status.
The minimum age to open a Credit Builder is 16 years old. A Cosigner is required for applicants under 18 years old.
*Some restrictions may apply. Credit score improvement is not guaranteed. Changes to your credit score are dependent on your specific financial behavior and history. Failure to make the minimum required loan payments by the payment due date each month may result in your loan payment(s) being reported as delinquent to credit bureaus which may negatively impact your credit score. Visit a UCCU representative for details. Federally insured by NCUA.