Credit Strong offers three loan products designed to help people improve their credit scores. This Credit Strong review will examine the different products, as well as their requirements and their alternatives, to help you decide whether Credit Strong is right for you.
Credit Strong has three well-designed products that can help someone with no credit history establish good credit, or which can improve the credit score of someone with a poor credit history. There are fees to be aware of, but the benefits may be worth the cost depending on your credit situation and financial goals.
- No hard credit check.
- No income requirements.
- Reports to all three major credit bureaus.
- Plans start at $15 per month or $99 per year.
- Does not allow you to transition to no-fee products once your credit score improves.
Note: While Credit Strong serves businesses, this review is focused on their products for individuals.
How Credit Strong Works
To understand how Credit Strong works, it’s important to understand the factors that impact your credit score and the difference between revolving and installment credit.
First, the factors that impact your credit score are:
- Payment history (35%). Your record of making on-time payments.
- Credit utilization (30%). The amount of credit used compared to your credit limit.
- Credit history (15%). The longer you’ve been using credit responsibly, the better your score will be.
- Credit mix (10%). The mix of different types of credit you have. Ideally, it’s best to have a variety of credit types on your account.
- Credit inquiries (10%). New credit inquiries can temporarily lower your credit score.
Regarding the credit mix factor, understand that there are two general types of credit: revolving credit and installment credit.
Revolving credit is credit that can be used repeatedly, up to a certain limit. The credit limit is determined by the credit issuer, based on factors like credit score and income. Credit cards are the most common type of revolving credit.
Installment credit is credit that must be repaid in fixed payments over a set period of time. Two common examples of installment credit are mortgages and auto loans.
With this information, you can evaluate different strategies to improve your score, depending on your particular situation.
- If your credit utilization is on the high side, one of the quickest ways to increase your score is to increase the amount of revolving credit available.
- If you only have installment credit on your credit profile — e.g., a car payment but no credit cards — you may be able to increase your credit score by taking out a revolving credit line.
Tip: If you want to see how various strategies may impact your credit score — such as adding $500 in revolving credit — we recommend Credit Karma, which allows you to track your credit score for free, see credit report cards for each credit bureau, and get personalized recommendations for increasing your score.
With that in mind, here’s an overview of Credit Strong’s three products.
|What it is:||A $500 revolving credit account reported to the three major credit bureaus.||A $1,000 to $2,500 installment account that is reported to the three major credit bureaus.||A $5,000 to $10,000 installment account that is is reported to the three major credit bureaus.|
|Credit limit reported:||$500 to $1,000|
|Fees:||$99 per year|
|Type of credit:||Revolving line|
|Best for:||Those with no credit history, or those who can benefit from adding a revolving line credit mix to their credit history.|
For $99 a year, Revolv adds a minimum $500 revolving credit tradeline to your credit profile. The goal is to help you improve your credit utilization and credit mix.
Credit Strong is essentially opening a secured credit card under your name. However, you don’t have access to this card. While your credit limit is $500, you cannot spend against this amount.
Once your account is established, you have the option to make monthly deposits into a savings account, which will unlock a higher credit utilization rate and generate monthly payment reporting to the credit bureaus. This allows you to positively impact your payment history, the largest factor in your credit score.
You choose the monthly savings amount — which Credit Strong refers to as “commitments” — but the company suggests a recommended range that will help you optimize your score. No interest is earned on your savings, and you get 100% of the funds you’ve contributed back when you close your account.
After you make three monthly savings commitments to your Credit Strong account, you’ll increase the credit limit being reported by $100. The maximum credit limit under the Revolv plan is $1,000.
|Credit limit reported:||$1,000 to $2,500|
|Fees:||$15 to $30 per month|
|Type of credit:||Installment line|
|Best for:||Those who would benefit from adding an installment loan to their credit mix.|
Instal reports $1,000 to $2,500 of installment credit to your credit profile. You pay $15 per month to have $1,000 reported or $30 per month to have $2,500 reported. There’s also an initial upfront fee of $15.
What’s happening here is that Credit Strong is loaning you money, which is deposited into a savings account that you don’t have access to. You then make monthly payments — either $15 or $30 — which include interest, back to Credit Strong.
You’re not required to pay back the entire balance in full. You can cancel at any time, and you’ll get back the amount accrued in your savings account.
Remember that when you pay $15 or $30 a month to Credit Strong, some of that goes towards paying off interest on the loan. So, if you’re making $15 monthly payments, much of that money is going towards interest and not accruing in a savings account.
Here’s an example:
During the repayment period, your payments are reported to all three major credit bureaus. This allows you to positively impact your payment history and utilization, and if you don’t have an installment line on your credit report, it will improve your credit mix.
You can maintain a Credit Strong Instal account for up to 10 years. However, as discussed in my final analysis below, that’s likely not in your best interest.
An optional feature of Instal is adding a savings component called Credit Build and Save, which accelerates your savings process. However, this feature has a required term of either 24 or 36 months.
While this does increase your monthly payment, more of that payment is being stashed away in a savings account. Overall, this option is designed for those who want a larger sum of money once they close their account.
I’d skip this option, however. There’s no benefit to one’s credit score that comes from using a credit building product and a saving product together, and doing so unnecessarily locks up your savings. Instead, I’d establish an emergency fund in a high-interest savings account.
Credit Strong’s Magnum product is designed for people with cash on hand but either no credit history or a poor credit score. It works the same as Credit Strong’s Instal product, but with larger limits.
There are two different plans:
It’s rare that someone would need such a high credit limit so quickly and also be able to comfortably afford these monthly payments. However, some situations that can come up where Magnum might help are:
- A successful business owner with little to no credit history who is looking to establish high credit limits fast to improve their credit score before applying for a business loan.
- A high income earner who is applying for a larger personal loan in the next few months and can benefit from a temporary boost.
Remember that these credit builder loans impact your debt-to-income ratio. Lenders — especially mortgage lenders — have standards to limit the amount of your monthly income that goes towards debt.
The classic example is the 28/36 rule, which dictates that no more than 28% of your monthly gross income should go towards housing expenses (principal, interest, taxes and insurance), and no more than 36% of your monthly gross income should go towards your debt.
It’s important to point this out because that $110-per-month plan negatively impacts your debt-to-income ratio by adding a $110 monthly payment. Therefore, with a product like Magnum, your income needs to be high enough to comfortably absorb the higher monthly payment.
Credit Strong Alternatives
If I had no credit history or a poor credit score, one of my first steps would be to see if I could get added as an authorized user on the credit accounts of family members. This is usually free, and it can have similar positive impacts to your score. Of course, whoever adds you as an authorized user must have a good credit score and history themselves.
Another option, which I tend to prefer over credit builder loans, is a secured credit card.
A secured credit card is backed by a deposit you make with the issuer. Many products on the market have no monthly fees and pay cash-back.
What I like most about secured credit cards, however, is that card issuers usually allow you to transition into a standard credit card after you establish a history of on-time payments. This allows you to keep your credit history intact once you’re ready to move on from the secured product.
This way, you’re not stuck for years paying an unnecessary monthly fee just to keep the oldest credit line you have on your report active.
Out of all the cards on the market right now, I like the Capital One Quicksilver Secured Cash Rewards Credit Card, which gets you 1.5% cash-back. You can view the best secured credit cards available right now on CardRatings.
When it comes to evaluating different credit builder products, options that may be of interest include:
- Cred.ai. This product is a combination credit card and savings account. How much you can spend is based on what’s in your savings account. Cred.ai’s best trait is that it has a no-fee option, which makes it a solid choice for someone with no credit history who is not in a rush to increase their credit score. Read our cred.ai review to learn more.
- Extra Debit Card. For $12 per month, Extra allows you to build credit without the risk of incurring debt. Extra prevents you from overspending by monitoring how much money is in your bank accounts. The credit limit that gets reported is based on how much money you have in your accounts. Extra is a good option for anyone who has a stable income but needs to establish credit history. Read our Extra Debit Card review to learn more.
Finally, understand that these strategies are not mutually exclusive. In fact, being added as an authorized user on an account with a high credit score, taking out a secured card, and then taking out an installment loan with Credit Strong, can all be done together to improve your score.
Credit Strong FAQ
There’s no early termination fee for closing an account. Funds that went towards the saving aspect of your monthly payment are returned. Using the $15 per month Revolv account as an example, you’ll get back $52 after one year. That means $128 would have gone towards interest during this time.
No, you can’t make payments with a credit card. You can have payments deducted automatically from a checking account or use a debit card. Payments made via a debit card will incur a convenience fee from Credit Strong.
Opening a new line of credit, whether installment or revolving, can temporarily lower the average age of credit lines on your account. As a general rule, this impact fades after six months. Remember, during this time, you’re also benefiting from the positive impact that Credit Strong provides. Overall, these factors should outweigh the temporary and small decrease, though every situation is different.
Yes. Credit Strong is a division of Austin Capital Bank, a member of the FDIC.
My Credit Strong Analysis
Credit Strong works best as a short-term solution. Your long-term goal should be to build a solid credit history where you no longer need these products. After all, the longer you rely on credit builder products to maintain a healthy score, the more you’ll pay. But beyond that, relying on these products comes with risks.
For example, part of your credit score is the age of your accounts, and another part is your credit utilization ratio. When you close your account, you lose what may be your oldest account and also suffer from a reduction in available credit — both things that can hurt your credit score.
If you haven’t built sufficient credit outside of these products, you may find yourself right back where you started: looking for credit builder products to help improve your credit score.
The best scenario is to use a service like Credit Strong for three to six months, benefit from a temporary credit score increase, and then — near the end of that period — apply for a more traditional line of credit, such as a no-annual-fee credit card from a major bank.
If you feel like you fit in this camp, then Credit Strong does have a lot to offer.