SELF LENDER: THE ULTIMATE REVIEW GUIDE IN 2020 & 2021
Can the Self app, formerly known as Self Lender, increase your credit score?
I’ll be going over exactly what it is, if it could benefit your specific situation and whether or not you should open a Self Lender account.
What is Self Lender?
Self Lender, now known as Self is a Fintech company that allows you to open a credit builder account which is another name for a credit builder loan.
So, basically you’re taking out a small loan in your own name. Instead of the funds being readily available to you, the money is held by Self in the form of a secured loan.
The money is placed into a CD which is a certificate of deposit.
Watch >> My Self Lender Review Video
What is a CD?
For those that don’t know a CD is a certificate issued by a financial institution.
Essentially, it would be like depositing a lump-sum amount to your bank.
Except, not being able to withdraw the funds for a specified time in exchange for a larger amount because they will pay you interest on your money.
So, for example if you opened a CD at your bank and deposited $1,000. Now let’s say for easy math….it’s a 12 month CD with a 1% annual percentage yield.
This means the bank will pay you your $1,000 back after 12 month plus you’ll get 1% because of the interest so in 12 months you can withdraw $1,010.
A CD isn’t meant to make you a ton of money, it’s just safe savings vehicle.
If you’re interested in toying around with some numbers for CD’s there’s a free online calculator on bankrate.com you can check out.
Self Lender Details
You agree to either a 12 or 24 month loan with them and at the end of the term, you can withdraw all of your funds.
However, you’re not depositing a lump-sum amount and just waiting for your term to end.
With Self, you’ll be making monthly payments until you reach the end of the 12 or 24 month term.
Does Self Lender Improve Credit?
Yes! For many people, Self Lender improves credit drastically!
This gives you an opportunity to make 12 or 24 on-time payments that all get reported to the credit bureaus.
This can make a huge difference if you don’t have a ton of accounts or credit history.
It can also help if you’ve missed a couple credit card payments because it will add 12 or 24 new on-time payments.
Also, it improves your on-time payment ratio which is a huge part of your credit score.
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The Importance of Payment History
Even a couple late payments can drop your score like 100 points and those late payments won’t get removed for nearly 7 years.
This is why payment history is so important and why self can make a huge difference for you.
But with the good can come the bad. Remember that self reports every month to the credit bureaus.
If you miss a payment, they will report to the bureaus and it will hurt your credit.
An easy way to not let this happen is to set your Self lender account on autopay.
It will make the payment every month for you automatically so you don’t have to worry about remembering.
Diversifying Is a Good Thing!
Your credit mix is also a small factor in your credit score so opening a self builder account and diversifying the type of accounts you have can actually help your credit score.
Now, when you first open the account, your score may drop a few points.
You’re opening a new account and your credit score improves as your average account ages.
This will only be temporary and shouldn’t affect your score much if at all.
Your Self Lender secured loan should show up on your credit reports in as little as 30 days.
Some people claim to have seen an increase in their scores in as little as 2-3 months of payments.
Let's Look at The Self App and Self Lender Platform.
Now, don’t be nervous when I say apply, they don’t do a hard inquiry so nothing goes on your credit report.
It’s basically just to verify you’re the person applying.
Self Lender understands their product and who needs it. You won’t be denied for a bad credit score.
The only reason I believe you’ll get denied is if you’ve done some shady things in the past like money laundering or other financial fraud.
This is extremely rare because they approve nearly everyone!
Self Lender Application
Honestly, if you can’t afford the bigger monthly payments, you can choose the lower options as low as $25/month.
The amount doesn’t really matter in the grand scheme of things.
You’re more worried about making the payments on time every month and building your credit!
If you decide to do the 24 month plan you can make $25 dollar payments, or you can choose the 12 month plan and make $48 payments.
There is no right or wrong!
So for the $89 dollar per month option for 12 months, you’ll end up paying $1080 over the 12 months.
You’ll receive $1,000 and the privilege of building your credit which should be worth well over $80 that you spent over the 12 months.
You’re essentially going to get back what you put in, but you’ll have 12 months of on-time payments.
After all, this the main reason you opened an account with Self in the first place. Once you’ve determined your terms, you’re ready to apply.
5. After you’ve applied you’ll need to wait maybe 24-48 hours to be approved.
Once you’re approved you’ll receive an email confirmation letting you know you’re approved and it will list the loan information and details.
After Being Approved
1. Login to your account and go to the settings tab.
2. Click add a payment method. I’d recommend adding your bank account as it’s free. With the debit card, you’ll have to pay a small transaction fee of like 3% each time you make a payment.
3. Once you’ve added your payment info, check the box “enroll and activate for autopay." This is important because it’s a set it and forget it strategy. You don’t have to worry about logging in and making the payment each month and risk forgetting a payment.
After you do this, you’re finished up and you can just login periodically if you need to otherwise you’re set until your term finishes up. Congrats!
Self Lender Benefits
The benefit to opening an account with Self Lender is you’ll have the opportunity to increase your credit score without having to take out an additional line of credit.
This can be a great do-it-yourself option for those that need to improve their credit.
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Minimizing debt is a major factor in improving your credit and building history!
Whether you want to apply for a home loan, auto loan or any other type of loan, you’re likely not going to get approved unless you have some sort of positive credit history and you’re over a specific score.
Yes, you’ll have to make monthly payments. This can be very manageable amounts depending on the self account you choose. It’s also a payment to yourself.
So, you’re able to build credit by paying yourself as opposed to paying a credit repair company hundreds of dollars each month with no guarantee of any results.
You also have to give your personal information out such as credit card number, social security number and other information.
That could really bite you in the ass if it turns out to be a sketchy company.
Self Lender Isn't Right For Everyone
Self Lender Isn't Right For Everyone
Now, as Self can be a great tool for many people to build their credit, it’s also not a one size fits all.
If you already have a good score, let’s say over 700, you probably don’t need to be opening an account with Self.
Unless you have a poor payment history which is driving you down to 700 when you should be at 800, then Self probably isn’t the best option for you.
It’s not to say that it necessarily will worsen your score, but it probably won’t increase your score.
If your score is already high or if you already have perfect payment history, there's no reason to sign up.
Who Does Self Lender Benefit?
Self is the most beneficial for someone that may be let’s say below 600 that is looking to improve their payment history and improve their score.
It’s also beneficial for someone that may not have much of a credit history at all.
It gives you an account with positive monthly payments each month which is what lenders want to see.
Lenders look at your credit report to be able to determine if you’re trustworthy of paying back their money they loaned you.
If you don’t have any credit history to look at, then they likely won’t approve you of that home loan.
So, it can be a great tool for someone that may be in college and doesn’t have much credit, but is looking for an easy way to start building their credit profile.
Other Benefits of Self Lender
Another benefit of Self is that you can create a free account and receive your credit score for free.
You don’t make any payments until you apply for the self-builder loan.
Also, I wouldn’t recommend this, but if you do open an account and are unable to pay it due to financial hardship, you can contact self and cancel the loan early.
You might have to pay like a $1 cancellation fee, but you won’t have to worry about late payments being recorded on your credit reports.
I say I don’t recommend this because if you’re opening a self credit builder account then you should be prepared to make the monthly payments each month.
Secured Credit Card vs Self Lender
Many people wonder if they should get a secured credit card or create a self lender account.
Now, there isn’t a right or a wrong.
With a Secured Credit Card
There’s no guarantee you’ll be approved even with it being secured.
You’ll also get a hard inquiry on your credit report as well as having to deposit your secured money.
So, for those unfamiliar, basically you send in x amount of money to the credit card company.
They will then send you a credit card with a $500 credit limit.
It’s called secured because the credit card company has secured your $500 in case you don’t pay the $500 you may charge up on your credit card.
If you don’t have the money to put towards a secured credit card then maybe self-lender is the better option for you to increase your credit score.
With a Self Lender Loan Account
Another option with Self is that after you’ve paid at least $100 toward your credit builder loan, you can actually get a secured credit card through them.
Your credit line can be as high as the amount that you’ve paid in.
So, if you’ve paid $300 of the loan, you could get a $300 credit line.
The reason they max you out on this is again a way of protection for them similar to the credit card company.
Your money is used as collateral if you don’t pay back your credit card totals.
This could be a great option for someone who is interested in both a secured card and Self Lender.
They can open the account with Self and start building credit and then have a secured credit card in a few short months after making some payments.
If you aren’t disciplined enough to make monthly payments, then you shouldn’t open either account because it’s going to end up costing you in the long-run and only hurt your score more.
Anyways, I hope you found this Self Lender article helpful. Self Lender can be a great tool for many people to help build and raise credit scores.
If you are still unsure of whether or not you should apply for a self lender loan account, feel free to leave a comment letting me know why.
I'll reply and give you my best recommendation for your situation!
However, if you do want to apply for a self lender account, click on the link and it will take you directly to where you need to go for an easy and quick sign up.Thanks again for reading!
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