Credit builder products are often marketed as a way to improve financial health. However, some come with hidden pitfalls that can do more harm than good. A study by WalletHub reveals how certain questionable practices in this industry continue to go unchecked, leaving consumers vulnerable.
StellarFi Prime
StellarFi Prime receives the lowest possible score of 0%. This service fails to report real tradelines, that is it does not provide actual loans or usable funds. Users link monthly bills to StellarFi Bill Pay Card, but this does not create genuine credit activity. This service allows manipulation of both credit utilization and negative credit reporting. StellarFi Prime optimizes credit usage by artificially inflating credit limits, creating a false impression of lower credit utilization. This approach completely underlines the integrity of credit reporting.
StellarFi Lite
StellarFi Lite scores marginally better at 4.0% but still employs questionable practices. Like its Prime counterpart, it reports no real tradelines or negative information to credit bureaus. The service enables manipulation of credit utilization and negative information reporting. StellarFi Lite charges $59.88 yearly for its services, unlike the Prime version. However, this fee does not justify or improve its credit-building effectiveness. The slight score difference from Prime is likely due to the cost factor rather than any meaningful improvement in credit-building practices.
Chime
Chime scores 11.1%, offering slightly more legitimate credit-building features than StellarFi. Users open a Chime Credit Builder Credit Card account, which creates a credit account reported to credit bureaus. However, this account has no credit limit and requires users to add money before making purchases. Chime does not allow gaming of credit utilization, that is, the credit usage cannot be manipulated. However, it reports no negative information to credit bureaus. This selective reporting creates an incomplete picture of users’ credit behavior. The service charges fees but provides limited genuine credit-building benefits.
TurboTenant Rent Reporting
TurboTenant Rent Reporting scores 26.7% for its approach to credit building along with a service cost of $59.88 annually. This service reports real tradelines based on rent payments. This means this product provides funds to its customers, which is a positive aspect. However, it only reports on-time payments, omitting any negative information. This selective reporting creates an incomplete and potentially misleading picture of tenants’ payment history. Landlords must sign up for the platform before tenants can register, which may limit accessibility.
Sesame Credit Builder (Inactive Users)
Sesame Credit Builder for inactive users scores 33.3%. The service requires users to open a Credit Sesame checking account and use a debit card for purchases. For inactive users, the benefits are limited. While the service reports negative information to credit bureaus, it does not report real tradelines. This approach creates potential inaccuracies in credit reporting. The fees for inactive users can be offset through different means, however it does not positively impact the credit-building effectiveness.
Experian Boost
Experian Boost, a free service, also scores 33.3% for its unique approach to credit building. Users connect their bank accounts, and the service identifies eligible purchases like streaming subscriptions, phone service, utilities, and rent. Experian Boost reports real tradelines based on these payments, which is a positive factor. However, it only reports positive payment information, omitting late payments. This selective reporting can artificially inflate credit scores without providing a complete picture of payment behavior.
Credit Karma Money
Credit Karma Money scores 40% for its unconventional credit-building method. Users open a Credit Karma checking account, and the service creates a $1,000 line of credit that users cannot spend. Instead, users decide how much to save monthly. This amount is transferred from the line of credit to a savings account. Repayments are reported as on-time payments to credit bureaus. This approach creates artificial credit activity. It raises questions about the authenticity of reported credit behavior. This service allows manipulation of negative information reporting and credit utilization. Some of its accounts are free to use, however, the artificial nature of the credit activity limits its effectiveness.
Sesame Credit Builder (Active Users
Sesame Credit Builder for active users scores slightly higher at 44.%. Active users benefit more from the service, which requires opening a Credit Sesame checking account and using a debit card for purchases. These purchases create a balance on a virtual secured account, with funds set aside as a security deposit. While the service reports negative information, it does not report real tradelines. This approach still creates potential inaccuracies in credit reporting. The service charges fees for the active users, which impacts the cost factor of its score.
Credit Strong
Credit Strong scores 65.0% for its approach to credit building. It reports real tradelines and negative information. Nonetheless, Credit Strong advises clients to terminate their accounts instead of failing to make payments on time. This prevents negative information from being reported. If an account is closed to avoid a missed payment, the loan shows on credit reports as paid off and closed. This feature allows users to manipulate negative information reporting, which impacts the score. The service charges fees of $15 annually, which are factored into the overall score.
Self Credit Builder Account
Self Credit scores are slightly higher at 66.7% with a model similar to Credit Strong. It reports real tradelines and negative information, operating like a traditional credit-builder loan. Customers can close their accounts rather than miss a due date for payments. It prevents negative information from being reported to the credit bureaus. On credit records, this debt is shown as closed and paid off. This feature allows the manipulation of negative information reporting.
GrowCredit – Accelerate Plan
GrowCredit’s Accelerate Plan scores 70.0%. Users create a GrowCredit account, add eligible subscriptions, and set their GrowCredit debit card as the payment method. Payments made with the debit card are reported to credit bureaus. While this creates real credit activity, it does not fully reflect traditional credit use. The service allows manipulation of credit utilization and negative information reporting. This plan is free, which contributes positively to the score. However, the limited scope of reported transactions and the potential for manipulation impacts its overall effectiveness.
GrowCredit – Grow Plan
GrowCredit’s Grow Plan scores slightly higher at 75.0%. It operates similarly to the Accelerate Plan, with users adding subscriptions and using a GrowCredit debit card for payments. These payments are reported to credit bureaus, creating credit activity. The service allows manipulation of credit utilization and negative information reporting. The Grow Plan charges $49.99 yearly, which impacts its cost score but may offer additional features than the Accelerate Plan.