Self Lender Review

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Hey I'm Adam Jusko from ProudMoney.com and in this video I am looking
at Self Lender, which is a company that helps people with bad credit or maybe no
credit history start to build up their credit report and build up their credit
score. So what Self Lender does is it offers what is called a "credit builder
loan." You take out a loan essentially, and that is put into a CD or a certificate
of deposit that has a term of 12 to 24 months. You can choose the product that
you want. So what you're doing is you are paying off the face value of that CD,
with interest, in equal installments each month over that term. If you make all
your payments on time and in full, at the end of that period you then get the CD
with the value of what that CD originally was and you hopefully have
improved your credit score also because you've been making on-time payments and
those payments are being reported to the major credit bureaus. Now how much does
your credit score go up? It is hard to say because everybody is starting from a
different place --- it depends on how bad your history is, it depends on
what else you might be doing at the same time that you were making these payments
over the course of the loan. But the bottom line is that Self Lender is going
to be reporting your payments on this loan and if you make them on time. it's
going to improve your credit score. Same thing with any other credit though --- if
you're not making them on time, you could actually be hurting your credit score so
just like anything else you have to make those payments on time. But the good
thing about the credit builder loan and the reason that it's attractive to a lot
of people is it doesn't actually make you take out a credit card or be
approved for a credit card in that way. And for a lot of people it's very
difficult to get into credit, and so this is maybe another avenue to increase
their credit score so they can get to a point
where they can qualify for those other credit cards. So I will give you an
example of one of the terms of these credit builder loans, so you can kind of
see what you're getting into. And I pulled this from the Self Lender website so
these are, you know, should be accurate numbers here. So if you choose
the 12-month CD or at least this is one of the choices, you get a 12-month CD and
it has a face value of 525 dollars. Now in terms of your fees and interest you
are going to pay a nine dollar administrative fee or whatever they call
it upfront to get the loan. And then you are going to pay twelve installments
over the course of that 12-month period of fifty dollars each. So when you get
to the end of that year, you will have paid $600 installments, plus
you'll have paid that $9 fee upfront so you'll have paid $609
nine dollars in order to own a CD that is worth $525
plus a miniscule amount of interest --- less than one dollar by our
calculations. So what has happened then is you've paid that upfront fee, you've
paid an interest rate of about 13.16%, you've gotten a CD ---
obviously it is worth less than what you've paid out, but this is
sort of the deal you've taken in order to improve your credit. You've paid more
to get something that is worth less than what you paid but you're
doing it with the idea of improving your credit score and so that's sort of how
that works. So a couple other notes about Self Lender. You still must apply in the
same way that you might apply for other credit, but Self Lender does not look at
your credit score and it does not do what they call a "hard pull" on
your credit score. What it actually does is it uses a --- and it's a little vague on
exactly how this works --- but it uses what it says is a history of your checking
and savings accounts that have closed, and that is through a company called
ChexSystems. So instead of using sort of your traditional credit
report, they're sort of using history of your bank accounts instead to decide if
you are approved or not. So that's kind of how that part works. The second
part is, if you are actually, you know, if you go to self lender and you
sign up with them and you do all this, and you're checking on your
credit reports to see how things are going... if you're looking for Self Lender,
you're not gonna see the name Self Lender, necessarily. What you're actually
going to see is... City National Bank of New Jersey is the actual lender here and
it is called a "secured installment loan", so that's more likely what you are going
to see on your credit report. So if you want to make make sure that, you know,
that's being reported, that's what you should be looking for. In terms of our
thoughts about Self Lender... for someone that has a bad credit history,
is really struggling to get into back into the credit game, that really
wants to improve their credit score, it is definitely a way to do it. And, you
know, it's all sort of above board in terms of how it's being done
and it does help you improve your scores, assuming that you make your payments on
time and that you know you're not doing anything else detrimental in
other credit areas of your life. But in the end, you're still... in order to
improve your credit score, you're paying more money than something is worth in
order to improve your credit. And you should look at that as, you know, how that
compares to a credit card that you might use to build your credit. Is that
favorable or unfavorable? In some ways it's maybe sort of in the
middle. Say you got a credit card, you have bad credit, you may have to pay more
in fees, you may have to pay more in interest. But in this case you might
actually end up paying more in interest
because you are forced to pay interest, where if you had a different credit card,
you're only paying interest if you don't pay off your balance. So you might have
to pay an upfront fee, an annual fee, to get a credit card in some cases, but if
you pay off your balance every month, you could be improving your credit
score without actually paying interest every single month. So it all
depends on how bad your credit history is --- how hard it has been for you
to be approved for other credit cards or loans as to whether Self Lender
is really a good deal for you. Sort of the worse your credit is and the
worse you are... the more difficult you are finding it to get credit, the
more Self Lender makes sense as a way for you to try to improve your credit
score. If you're kind of on the margins and you can still get approved for
other things that have maybe an annual fee but it's not that high, then
that still may be the way to go to improve your credit score as long as
you're making those payments on time, because you won't necessarily pay
interest if you're paying off your balance every month. So that is our
review of Self Lender. Please go to ProudMoney.com for other credit reviews and
"best of" personal finance lists and all sorts of other good stuff too. Thanks.
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Self Lender Review

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