A credit score is a number between 300 and 850 that records one’s creditworthiness. Those with higher credit scores are more likely to receive loan approval and reduced interest rates. This score is based on one’s credit history, drawn from factors such as the total number of accounts in their name, types of loans, length of credit history, debt utilization, etc. Several credit-building apps have emerged on the market to help people improve their credit scores.
How credit-building apps work
Credit-building apps tend to offer three distinct services. These are as follows:
1. Credit monitoring
With major credit bureaus, there are restrictions on how often one can access their credit score. However, some apps offer credit monitoring services to allow one to check their score daily, weekly, or monthly. They also offer tips and suggestions for how to improve one’s score. Lastly, they also monitor activity on one’s accounts, sending alerts for any new accounts or suspicious activity that may occur.
2. Credit building lenders
Some apps also offer credit-building loans. As the name suggests, these are meant to help build one’s credit score. Since one makes regular payments in a short period of time, these loans can significantly improve one’s credit score.
3. Credit reporting
Several apps also help boost credit scores by reporting alternative payment data. Since these payments (such as rent or utilities) are not considered in traditional credit reports, they may help improve credit scores.
Top credit-building apps to use
Here are some top apps to use to boost one’s credit score:
1. Experian Boost
Hosted by the credit bureau Experian, this app is ideal for those with a history of rent and utility payments. It works on the premise of credit reporting, including alternative payments that aren’t usually reflected in one’s credit score. To use this, one only needs to sign up, link their payment accounts, and choose their positive payments to be reported. While it may not be able to fix poor credit, it is a great, inexpensive way of boosting one’s score instantly.
2. SeedFi
Those who do not have any credit or borrowing history must try using SeedFi to boost their credit scores. This app offers lender services, with interest-free loans beginning at as little as $10. Users can pay this loan back within the payment cycle. SeedFi then reports this positive payment to credit bureaus, helping improve credit scores. Additionally, this service is free to use, helping first-timers build their credit without breaking the bank.
SeedFi also offers Borrow and Grow loans, which offer users cash immediately upon approval. This loan includes a sum that goes into a savings account. Once the loan is paid off, users access this account, effectively acting as an emergency fund. However, this service typically has high interest rates (12.96-29.99%), which could prove costly over time.
3. KikOff
KikOff is ideal for those looking to make small monthly payments. According to experts, this service can help users improve their credit score by 58 points. Sign-up on KickOff does not require a credit check. With their credit account, users are offered a small line of credit ($750 per month) to make purchases from the KikOff store. Users can pay these back in the form of small monthly payments to help boost their credit score.
The account has a $5 monthly fee that is part of the credit line. This helps one build credit, even if they do not borrow anything else. Additionally, the service does not have associated interest charges or late fees, letting one focus on covering the principal amount easily.
4. CreditSesame
CreditSesame is a great option for those looking for a credit reporting app. This free service also offers personalized advice to help users improve their financial standing and boost their credit scores. It operates by recording and reporting a portion of one’s payments to the major credit bureaus. This evidence of on-time payments helps improve one’s credit scores. The app also offers cash rewards for services one avails themselves of on their platform. Users can also avail themselves of a free checking account and a new debit card linked to it for improved cash rewards on the app.
Credit scores can have a significant effect on one’s life. They are used to determine one’s reliability by prospective employers and to decide interest rates and approvals on loans, credit cards, mortgages, etc. by lenders. Using the credit-building apps mentioned above can help people improve their scores and establish sound financial footing for the future.