What is Self Financial?
After reading our other articles on credit scores, you may be wondering about the different ways that you can build your credit. While it’s no doubt that a great credit score can ease your path to financial stability and provide you with greater access to loans and credit cards, it can be extremely difficult to obtain. Many even argue that it’s near impossible to build credit unless you already have it! Fortunately, here at Savology we are focused on finding the best tools available to help you get around that.
Self Financial (FKA Self Lender), who came into the market in 2014, offers an innovative solution to help you build credit without requiring any money upfront. Self does this through a Credit Builder Account, which is a specific type of personal installment loan with the sole purpose of establishing a positive payment history. It’s a great alternative to a secured credit card for those that don’t have any money for a deposit, and even helps you build some savings at the same time. It’s particularly useful for those who are new to credit or who might not have access to traditional financial products.
Self Financial Overall Rating: 4.6 ★ / 5.0 ★
Building and maintaining a strong credit score is an extremely important part of strengthening your financial situation. Self features an easy-to-use platform, low admin fees, and competitive interest rates. It’s a unique tool that is more accessible and offers what other credit-building services do not or cannot.
Self helps build credit while accumulating savings and the temptation and risk of having available credit is reduced while still providing the benefits. Customer and business interests are aligned with this product since it is also in Self’s interest to see your credit improve.
Pros & Cons of Self Financial:
Pros of Self
- Effective tool for starting or improving credit
- No deposit required
- Builds savings
- Lower risk than other options
- Positive user reviews
- Reputable company
Cons of Self
- Timing and access to funds is restricted by CD terms
- No temporary suspending of accounts
- What happens to the account after?
Offering/Features: 4.6 ★ / 5.0 ★
Credit Builder Account
Self works with their banking partners to help you get a Credit Builder Account, also referred to as a credit builder loan or a savings-secured installment loan. This type of unsecured loan is typically very small (under $1,500) and not accessible for the recipient until paid off in full. After you are approved and the loan is issued, the value is held by one of Self’s banking partners in Certificate of Deposit to accrue interest. You then make monthly payments over the life of the loan until it is paid off, at which time you will get access to the principal amount that you put in minus fees and interest.
So, the question is it really all worth it? Well, your credit score is heavily weighted toward positive payment history – in fact, it makes up 35% of your total credit score! With Self’s Credit Builder Account, you have the flexibility of picking a monthly payment amount that fits your budget, which is extremely important since missing any payments will also hurt your score. Self offers 12- and 24-month terms depending on the monthly payment amount you select, which can be as low as $25 a month. As you make the monthly payments these are reported to the three credit bureaus.
Upon completion of paying off your Credit Builder Account, you can also elect to turn your savings into a secured credit card to continue building credit if desired. You can open a secured credit card with Self as long as you meet their 3 requirements:
- Have an active Credit Builder Account for at least 3 months
- Have at least $100 in total Credit Builder Account savings
- Have your account in good standing
During the repayment period on your Credit Builder Account, you also have access to free credit monitoring and a VantageScore by Experian.
Pricing: 4.5 ★ / 5.0 ★
There are a few costs to be aware of when using Self’s services and opening a Credit Builder Account. When you are approved for a credit builder loan, Self has a non-refundable administrative fee between $9 and $15, depending on the size of the loan being issued .
Fees and interest rates associated with the loans are also fairly reasonable for a few reasons: Default liability is lower for the lender since they actually hold the money, and the interest you make on the loan goes back into the account to help pay any costs. APRs for these loans generally stay under 16%.
You may also incur some additional fees if you make any of the monthly payments late or close your account earlier than the established terms.
There still are more affordable ways to build credit such as utilizing a credit card without ever having to paying fees or interest. However, for those with a low credit score or no score at all may have a hard time getting approved for one on their own. Self’s costs are very reasonable for the potential value of making a substantial impact to your overall score.
User Experience/Ease of Use 4.6 ★ / 5.0 ★
With most online services nowadays, we are seeing a shift in ease of enrolling. This holds true with Self as they do a great job at making the entire application process quick and easy. In most cases it takes less than five minutes to join and get approved for the account. You sign up by providing your name, email, address, Social Security Number, and other information to verify your identity. You will then select your loan terms and enter payment information for fees and loan payments.
We found the entire process surprisingly user-friendly and, if you hit a snag, customer support is available to help if needed. They also have a great help center with a vast amount of resources and helpful articles to help answer any questions. Self is also available in all 50 states.
How it works:
Open a Credit Builder Account
A loan is taken out in your name, but instead of being sent to you, it is held by a Self Financial bank partner. You can get started and open your Credit Builder Account here.
Pay off the loan in 1 – 2 years
Make monthly payments to Self over the selected terms.
Get the money back after repayment
When the loan matures after the selected term ends, the money available to use to contribute to an emergency, savings, or investment fund.
Limitations: 4.6 ★ / 5.0 ★
Be aware that there are some restrictions to the Self Credit Builder Account. As mentioned, you will not have immediate access to the money when the loan is issued. Unless you need money right away, this limitation is generally a benefit since it ultimately allows you to create a savings account when repaying the loan.
As far as where the loan is held, the interest rate on the CD is very low, meaning you won’t be making a lot of interest on your savings here. Though interest yield isn’t the primary focus of this tool. And you must also commit to the CD term selected. If the account is closed early, you may be subject to some fees and surrender charges.
At this time enrollment is also only available to US citizens with a valid social security card and at least 18 years old. We also recommend linking a bank account with Self, although there are other options, this way avoids any additional convenience fees.
Security: 4.7 ★ / 5.0 ★
As with any financial account or borrower/lender situation, you will be providing some personal information to verify your identity. Self is dedicated to taking your security seriously and encrypts your data using industry-best practices and procedures.
In addition, the money held in your Credit Builder Account is FDIC insured by Self’s banking partners.
Is Self Financial Right For You?
Essentially, deciding to open an account with Self comes down to a few specific things. We would recommend Self if you:
- Don’t mind paying a small fee to better your credit score
- Don’t have better options available; i.e no money upfront, a co-signer, or don’t like the risk of traditional tools like a credit card.
- Don’t have the money upfront
- View the money being locked up, and ending in a small pile of savings dollars at the end of the term, as a positive and not a downside
- Source: https://www.myfico.com/credit-education/whats-in-your-credit-score
- Sample product: $25 month payment, 24 month term with a $9 admin fee at a 14.92% Annual Percentage Rate. Sample product: $48 month payment, 12 month term with a $15 admin fee at a 15.65% Annual Percentage Rate. Please refer to https://www.self.inc/pricing for the most recent pricing options.
Self helps build credit while accumulating savings and the temptation and risk of having available credit is reduced while still providing the benefits, earning them a 4.6/5 ★ rating.
This review is provided by and expresses the opinions of Savology to help users make informed financial decisions. Savology does not receive compensation for its provider recommendations.