Self, formally known as Self Lender, offers products that help people establish credit or improve their credit score. In this Self review, we’ll take an in-depth look at their products, explain when using these products makes sense, and outline their potential impact on your credit score.
Self offers four types of credit building loans (called Credit Builder accounts), as well as a secured credit card that can transition into an unsecured card over time. The cost of Self’s credit building loans range from $25 to $150 per month, with terms of 12 and 24 months. At the end of the term, you get back the money you paid (minus interest and fees). Self’s secured credit card differs from a traditional secured card in that there's no up-front deposit or hard credit check. A Self Credit Builder account is required to open a secured card. Overall, Self stands out with its combination of products for those looking to quickly improve a poor or fair credit history. Because of its costs, we think there are better alternatives for people looking to establish their credit for the first time.
- Reports to all three major credit bureaus.
- Credit history is not required to open an account.
- Allows you to transition from a secured card to an unsecured card, which keeps your credit history intact.
- Self’s credit builder loans have a high interest rate.
- The $25 minimum plan is more expensive than competitors.
- Taking out a loan or a new credit card can have a short-term negative impact on your score.
What Is Self?
Self is a financial technology company with the stated mission of helping people “build credit and savings and reach [their] financial goals.”
Self’s two offerings consist of:
- Credit Builder accounts (loans).
- A secured credit card that can transition to a traditional (unsecured) credit card.
Self Credit Builder Account
With a Self Credit Builder account, you’re essentially taking out a loan that you pay back over time in the form of monthly payments. This loan (along with every on-time loan payment you make) gets reported to the three major credit bureaus, potentially helping you improve your credit score.
The key difference between a traditional loan and a Self Credit Builder account is that instead of getting a lump sum of money upfront, you get back all the money you paid (minus fees and interest) at the end of the designated period (which is either 12 or 24 months, see table below).
Self has four Credit Builder account plans available:
|Small Builder||Medium Builder||Large Builder||X-Large Builder|
|Term length:||24 Months||24 Months||12 Months||12 Months|
|Total amount paid:||$600||$840||$576||$1,663|
|One-time admin fee:||$9||$9||$9||$9|
A Self Credit Builder account is listed on your credit report as an installment line of credit. If you only have revolving credit (such as credit cards), this can help you diversify your credit mix (which is one of the factors that determines your credit score).
Credit mix accounts for just 10% of your credit score calculation, so this won’t move the needle much. At the same time, when paired with the positive effect of the on-time monthly payments being reported, it could help you get a small boost relatively quickly.
How Does the Self Credit Builder Account Work?
Where a Credit Builder account will have the most impact is in your payment history, which is the single biggest factor in your credit score (35% of the calculation).
Self reports your payments to all three major credit bureaus, so as long as you make your payments on time, you’ll build a positive credit history. If you miss a payment, Self will also report that missed payment to the credit bureaus, so there is some risk associated with opening an account.
While a Credit Builder Account can very likely help you improve your credit, that improvement will come at a cost. Opening an account is equivalent to taking out a loan, and you will pay fees and interest. For example, with a Small Builder account you’ll pay Self $609 over the course of two years and get back just $520.
When does the benefit justify this relatively high cost?
Those with a poor payment history on their credit report will benefit most from a standalone Self Credit Builder account. But if a factor such as credit utilization is holding your credit score back, you won’t see a big boost with just a credit builder loan. In that case, you’ll likely see the most benefit from adding the Self Visa Credit Card to your credit portfolio (or by leveraging the other strategies discussed below).
Pro tip: Open an account with Credit Karma to get a free credit report card with customized recommendations for improving your credit score.
Self Visa Credit Card
Once you’ve made three monthly payments and have $100 or more in savings progress with your Credit Builder account, you can apply for the Self Visa credit card, which is a secured credit card that you can use to make purchases.
There are a few key differences between this card and traditional secured cards.
- Unlike a traditional secured card (where a deposit is required), the savings in your Self Credit Builder account acts as the deposit for the Self Visa credit card.
- No hard credit check is required to open your Self Visa credit card.
- Your credit limit increases as you build your savings balance in your Self Credit Builder account.
- There is a $25 annual fee.
Similar to a secured card, payments are made out of your own checking account. In other words, your Credit Builder account isn’t used to pay off your bill — just to secure the balance. That means missing a payment could negatively impact your score, as could carrying too high of a balance.
The benefits to your credit score of having a Self Credit Builder account and Self Visa Credit Card are:
- Your credit limit increases monthly as you progress on your savings goals with the Self Credit Builder account. This can help you lower your credit utilization ratio, which is a key factor in your credit score calculation.
- You’re building a positive monthly payment history on a revolving line of credit and an installment line of credit, which not only boosts your payment history but positively impacts your credit mix.
Opening a Self Visa Credit card makes sense for people with a poor payment history, a lack of revolving credit on their credit report, or a high credit utilization ratio.
After having had the secured card for six months, Self may extend you an unsecured credit limit, which can help positively impact your credit utilization rate. Qualification for the unsecured limit isn’t guaranteed, even for those who have made their monthly payments on time. Self will ask you to share your income with them before approval.
Why Not Just Build Your Credit Score for Free?
If you don’t have a credit history and are starting from scratch, you can and should consider the many free ways to establish credit.
The two strategies I recommend first are:
- Become an authorized user on a friend or family member’s credit card. This option is free and my favorite way to establish a credit history. The details of their account will appear on your credit report, and you’ll get the associated benefits.
- Open a secured credit card. Secured cards require a higher initial deposit than Self’s products, but the best secured credit cards come with no annual fees and can even earn rewards.
Many secured credit cards from major banks allow you to transition to an unsecured card (and get your deposit back) after a year or so of good behavior. Furthermore, unlike with Self, you can transition to a no-annual-fee card that earns cash-back.
The average age of your credit accounts is also a factor in your credit score calculation, so adding a secured card and transitioning to a traditional card later allows you to maintain a longer credit history. (When the transition happens, your account details will stay in place on your credit report). Ideally, your first credit card is one that you’ll keep for decades, so having one that charges an annual fee can add up over time.
The big downside to a secured card is that you can run up a balance, leaving you paying interest and having a high credit utilization rate. If that’s the case, you can look at options such as cred.ai or the Extra debit card that limit your spending ability by monitoring your bank account.
Learn more: See our Cred.ai review and our Extra debit card review.
Self vs. Credit Strong
One popular alternative to Self is Credit Strong, which has three different 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 reported to the three major credit bureaus.|
|Fees:||$99 per year.||$15 to $30 per month.||$55 to $110 per month.|
The costs for the Install and Magnum accounts listed above come with no savings component. In other words, you’re not getting any of your monthly payments back with Credit Strong.
However, Credit Strong does have an optional savings feature, which adds to your monthly payment but allows you to get part of your monthly commitment back once you decide to close your account.
Overall, Credit Strong provides a faster path to a higher revolving credit limit or loan amount, which can help people with shorter time horizons (e.g., six months). But you’re paying higher fees for these higher limits.
For more information, see our Credit Strong review.
Self Credit Builder FAQs
There is an application process for a Credit Builder account, but it’s much more lenient than that of even secured credit cards. There are no income or credit score requirements. One primary factor they’re looking for in the application process is ID verification and to make sure you fulfill their basic requirements, which are that you’re a U.S. citizen or permanent resident, have a student visa or Social Security number, are at least 18 years old, and have a valid bank account. A soft credit check is pulled (which doesn’t impact your score), and you’re typically approved within minutes.
Self isn’t a bank. Their banking partners include Sunrise Banks, Lead Bank and SouthState Bank. All the banks Self partners with are insured as members of the FDIC, which insures your funds up to $250,000.
You can close down your Self account at any time. You’ll get back any money you have in the savings account, minus a nominal early withdrawal fee.
Keep in mind, this also closes down your credit lines open with Self, which will impact your credit history.
You have 15 days from your statement date to make your payment before a late fee is assessed (up to 5% of the monthly payment amount). If your payment is 30 days late, you’ll get a negative mark on your credit report.
Self Review: Final Verdict
Self has strong credit builder products for those with one to two year time horizons.
For those just starting to build their credit history and who don’t have a large purchase on the horizon (within the next two years), my preference would be to get a secured credit card. Then, build your credit profile organically without paying for credit builder loans.
However, if you’re likely to have a large purchase — such as an auto or home — Self’s products can help boost your credit score faster with reasonable fees, and you’ll save money on your loan thanks to your higher score.
For more info, visit Self’s website.